Q3 2025 Graham Corp Earnings Call
Operator assistance. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce Tom Cook managing director at ICR. Please go ahead.
Speaker Change: Thank you Paul and good morning, everyone welcome to <unk> fiscal third quarter 2025 earnings call with me on the call today are Dan Dora CEO, Crestone, Chief Financial Officer, and Matt Meloy, President and Chief operating Officer.
Speaker Change: This morning, we released our financial results our earnings release and accompanying presentation to today's call are available on our website at IR Dot Graham Corp Dot com.
Greetings and welcome to the Graham Corporation fiscal third quarter 2025 financial results Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad.
Speaker Change: You should be aware that we may make forward looking statements during the formal discussion as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today.
Speaker Change: Minder This conference is being recorded.
Speaker Change: It is now my pleasure to introduce Tom Cook managing director at ICR. Please go ahead.
Speaker Change: These results these risks and uncertainties and other factors provided in the earnings release as well as with other documents are filed by the company with the Securities and Exchange Commission you can find these documents on our website or at SEC Dot Gov.
Speaker Change: Thank you Paul and good morning, everyone welcome to Grand fiscal third quarter 2025 earnings call with me on the call today are Dan Dorian CEO for stone, Chief Financial Officer, and Matt Meloy, President and Chief Operating Officer. This morning, We released our financial results our earnings release and accompanying presentation to today's call are available on our own.
Speaker Change: During today's call. We will also discuss non-GAAP financial measures. We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP.
Speaker Change: Website at IR Dot Grant Corp Dot com.
Speaker Change: We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides.
Speaker Change: Be aware that we may make forward looking statements during the formal discussion as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today.
Speaker Change: We also use key performance indicators to help gauge the progress and performance of the company. These key performance metrics, our orders backlog and book to Bill ratio. These are operational measures and a quantitative reconciliation of each of this is not required or provided you can find the disclaimer regarding our use of kpis at the back of today's presentation.
Speaker Change: These results these risks and uncertainties and other factors provided in the earnings release as well as with other documents filed by the company with the Securities and Exchange Commission you can find these documents on our website or at SEC Gov.
Speaker Change: And with that if you'll please advance to slide three I'll turn it over to Dan to begin Dan.
Speaker Change: During today's call. We will also discuss non-GAAP financial measures. We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP.
Speaker Change: Okay.
Dan Dora: Thanks, Tom and good morning, everyone.
Dan Dora: Many of you likely saw the press release, we issued yesterday morning regarding our leadership succession plan I'm excited to share additional details, but first I will spend a minute on our third quarter results before Matt covers our operations.
Speaker Change: We've provided reconciliations of non-GAAP measures to comparable GAAP measures in the tables that accompany today's release and slides.
Speaker Change: We also use key performance indicators to help gauge the progress and performance of the company. These key performance metrics, our orders backlog and book to Bill ratio. These are operational measures and a quantitative reconciliation of each of this is not required or provide it you can find the disclaimer regarding our use of kpis at the back of today's presentation.
Kris: Kris walks you through our financials.
Dan Dora: So we're on slide three.
Dan Dora: We continued to deliver steady growth across the business.
Dan Dora: Revenue for the quarter was $47 million.
Dan Dora: Marking a seven 3% increase over the prior year period.
Speaker Change: So with that if you'll please advance to slide three I'll turn it over to Dan to begin Dan.
Dan Dora: We saw strength across our key end markets with defense, notably up 11%.
Speaker Change: Yeah.
Dan Dorian: Thanks, Tom and good morning, everyone.
Dan Dora: Our gross margin improved by 260 basis points, reaching 24, 8% of sales driven by leverage on higher volume favorable mix and improving execution and finally, our adjusted EBITDA margin expanded by 180 basis points to eight.
Speaker Change: Many of you likely saw the press release, we issued yesterday morning regarding our leadership succession plan I'm excited to share additional details, but first I will spend a minute on our third quarter results before Matt covers our operations and Kris walks you through our financials.
Dan Dora: 6% of sales.
Dan Dorian: So we're on slide three.
Dan Dora: This margin expansion translated into meaningful bottom line growth reinforcing our focus on high margin opportunities and solid execution execution throughout the business.
Dan Dorian: We continued to deliver steady growth across the business.
Dan Dorian: Revenue for the quarter was $47 million, marking a seven 3% increase over the prior year period.
Dan Dora: Overall I am very pleased with our performance in the fiscal third quarter, which reflects the hard work of our entire Graham team has undertaken over the last several years.
Dan Dorian: We saw strength across our key end markets with defense, notably up 11%.
Dan Dorian: Our gross margin improved by 260 basis points, reaching 24, 8% of sales driven by leverage on higher volume favorable mix and improving execution and finally, our adjusted EBITDA margin expanded by 180 basis points to eight.
Dan Dora: Looking ahead I could not be more excited about the future.
Dan Dora: The long term demand environment is extremely favorable with our proprietary and highly engineered product portfolio, enabling us to capture additional opportunities while furthering grams global reach.
Dan Dorian: 6% of sales.
Dan Dora: We continue to focus internally on improving our operations engaging with key stakeholders and implementing best practices across the organization.
Dan Dorian: This margin expansion translated into meaningful bottom line growth reinforcing our focus on high margin opportunities and solid execution execution throughout the business.
Dan Dora: Turning to slide four.
Dan Dorian: Overall I am very pleased with our performance in the fiscal third quarter, which reflects the hard work of our entire Graham team has undertaken over the last several years.
Dan Dora: As we announced yesterday, we are implementing a thoughtfully structured two phase leadership transition that has been thoroughly evaluated and approved by our board over the last 18 months.
Dan Dorian: Looking ahead I could not be more excited about the future.
Dan Dora: On February 5th Matt Malone was appointed President and Chief operating Officer.
Dan Dorian: The long term demand environment is extremely favorable with our proprietary and highly engineered product portfolio, enabling us to capture additional opportunities while further in grams global reach.
Dan Dora: While Mike Dixon has been has been promoted to general manager of Barbara Nichols.
Dan Dora: And the second phase effective June 10th.
Dan Dorian: We continue to focus internally on improving our operations and engaging with key stakeholders and implementing best practices across the organization.
Dan Dora: I will transition to executive chairman.
Dan Dora: Focusing on strategic advisory and business development initiatives.
Speaker Change: While Matt will assume the CEO role and is expected to join our board.
Dan Dorian: Turning to slide four.
Speaker Change: At that time, Mike Dixon will be promoted to vice President of Graham Corporation, while continuing his leadership of Barbara Nichols and.
Dan Dorian: As we announced yesterday, we are implementing a thoughtful lease structured two phase leadership transition that has been thoroughly evaluated and approved by our board over the last 18 months.
Speaker Change: And Jonathan painter will transition to lead independent director.
Dan Dorian: On February 5th Matt Malone was appointed President and Chief operating Officer.
Speaker Change: These appointments reflect our ability to develop and promote internal talent, ensuring continuity in our strategic vision, while positioning us for future growth opportunities.
Dan Dorian: Well, Mike Dixon has bad debt has been promoted to general manager of Barbara Nichols.
Dan Dorian: And the second phase effective June 10th.
Speaker Change: I am pleased that Matt will be stepping into the role of CEO.
Dan Dorian: I will transition to executive chairman.
Speaker Change: Matt has demonstrated exceptional leadership as general manager of Barber Nichols since 2021 <unk>.
Dan Dorian: Focusing on strategic advisory and business development initiatives, while Matt will assume the CEO role and is expected to join our board.
Speaker Change: Delivering impressive results, including 9% compound annual revenue growth and achieving double digit revenue growth in each of the last two years.
Dan Dorian: At that time, Mike Dixon will be promoted to vice President of Graham Corporation, while continuing his leadership of Barbara Nichols and Jonathan painter will transition to lead independent director.
Speaker Change: Throughout his tenure, Matt has been maintained full P&L responsibility, while playing an integral role in our corporate strategic planning.
Dan Dorian: These appointments reflect our ability to develop and promote internal talent, ensuring continuity and our strategic vision, while positioning us for future growth opportunities.
Speaker Change: I think it's important to highlight that we have done this transition before when.
Speaker Change: When Matt took over Barbara Nichols, when I became CEO of Graham and myself and the board have full confidence in his abilities.
Speaker Change: I am pleased that Matt will be stepping into the role of CEO.
Speaker Change: Additionally, I'm happy to announce that Mike Dixon will be assuming leadership of Barber Nichols.
Speaker Change: Matt has demonstrated exceptional leadership as general manager of Barbara Nichols since 2021 delay.
Speaker Change: Mike brings a deep industry experience product expertise and institutional knowledge that make him ideally suited for this role.
Speaker Change: Delivering impressive results, including 9% compound annual revenue growth and achieving double digit revenue growth in each of the last two years.
Speaker Change: From a personal standpoint, it's been a pleasure to lead Graham for nearly four years as CEO.
Throughout his tenure, Matt has been maintained full P&L responsibility, while playing an integral role in our corporate strategic planning.
Speaker Change: And Barbara Nichols for 24 years prior to that.
Speaker Change: I look forward to this next phase of my career, which will require less time away from my family and enable me to focus on what I enjoy which is business development and strategy.
Speaker Change: I think it's important to highlight that we have done this transition before.
Speaker Change: When Matt took over Barbara Nichols, when I became CEO of Graham and myself and the board have full confidence in his abilities.
Speaker Change: Over the next several months I will be focused on a seamless transition and we will continue to be a resource for the company beyond that and actively engaged.
Speaker Change: Additionally, I'm happy to announce that Mike Dixon will be assuming leadership of Barber Nichols.
Speaker Change: Now I will turn it over to Matt who will provide more insight into our recent growth initiatives Matt.
Speaker Change: Mike brings a deep industry experience product expertise and institutional knowledge that makes him ideally suited for this role.
Matt: Thank you Dan and good morning, everyone I am truly grateful for the trust placed in me by Dan and the board and our entire organization.
Speaker Change: Having worked closely with the entire executive team and the board on developing and executing our strategic plan over the last couple of years I am energized to lead DRAM into its next chapter of growth.
Speaker Change: Our strategic plan remains firmly in place as the team and I continued tremendous potential to build on our strong foundation through a robust sales pipeline operational improvement initiatives and opportunities in adjacent markets weakened.
Speaker Change: We continue to believe in this strategy and are fully committed to executing it while driving sustainable growth.
Speaker Change: Our success has always been rooted in our talented team strong customer relationships and commitment to technology and operational excellence.
Speaker Change: I look forward to working with our entire organization to capture the significant opportunities that lie ahead, and importantly, providing our customers with leading quality products and service.
Speaker Change: I'd like to spend a minute providing an operational update on a couple of key projects, we recently announced.
Starting with our new <unk> manufacturing facility, we're exciting excited to announce that the construction of the Grand facility is progressing well and remains on schedule for completion in June of this year.
Speaker Change: This 29000 square foot expansion will significantly enhance our manufacturing capabilities and capacity for naval defense work.
Speaker Change: This expansion will support our planned growth and continue to strengthen our position as a key supplier to the U S. Navy.
Speaker Change: Turning to our state of the art cryogenic propellant test facility. This facility is continuing to progress towards construction and will provide a scalable cost effective alternative to existing centers.
Speaker Change: The facility will serve critical programs needing timely specialized testing solutions for liquid hydrogen liquid oxygen and liquid methane across space.
The next available comfort specialist will be with you momentarily.
Okay.
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Speaker Change: <unk>, new energy and potentially even medical applications. We are expecting initial testing to begin by mid calendar year 2025.
Speaker Change: These initiatives coupled with our investments in R&D and focus on operational excellence will help drive our long term growth forward.
Chris: With that I will turn it over to Chris for a third quarter financial details Chris.
Chris: Thanks, Matt and good morning, everyone.
Chris: So again.
Chris: I will begin my review of results on slide five.
Chris: Sales for the quarter totaled 47 million or seven 3% increase over last year.
Chris: This was driven by growth across our key end markets, including chemical petrochemical space.
Chris: In the commercial aftermarket.
Chris: These increases were partially offset by lower refining revenue due to the timing of projects.
Chris: Our growth was supported by the expansion of new defense programs.
Chris: Improved pricing and execution and the timing of projects.
Chris: Further.
Chris: We are observing continued strengthen our aftermarket revenue, which was up two 4% over the record levels of last year.
Chris: As a reminder, the third quarter of our fiscal year is typically our lowest revenue quarter, reflecting the holiday season and increased levels of vacation.
Chris: Turning to slide six our gross margin for the quarter expanded 260 basis points to 24, 8%.
Chris: This improvement was primarily driven by higher sales volume.
Chris: Favorable project mix and.
Chris: Enhanced pricing and better execution.
This was partially offset by higher incentive compensation.
Supported by the expansion of new defense programs.
Chris: Our gross profit for the quarter also benefited 254000 or roughly 50 basis points from the Blue Forge Alliance well, they're training Grant we announced in July.
<unk> pricing and execution and the timing of projects.
Further.
We are observing continued strength in our aftermarket revenue, which was up two 4% over the record levels of last year.
Chris: As a reminder, the blue forge alliances a nonprofit that supports the U S Navy submarine industrial base.
As a reminder, the third quarter of our fiscal year is typically our lowest revenue quarter, reflecting the holiday season and increased levels of vacation.
Chris: This $2 1 million grant supports our defense, while they are training program in Batavia and funds related equipment.
Chris: To date, we have received $1 5 million of funding under this grant and expect to recognize the balance in the next two quarters.
Turning to slide six our gross margin for the quarter expanded 260 basis points to 24, 8%.
Chris: We are grateful for this partnership as we expand our capabilities and talent pipeline.
This improvement was primarily driven by higher sales volume.
Favorable project mixed enhanced.
Chris: Turning to slide seven you can see the strength of our earnings from the quarter and on a more historical basis.
Enhanced pricing and better execution.
This was partially offset by higher incentive compensation.
Chris: GAAP net income for the third quarter reached one 6 million.
Our gross profit for the quarter also benefited 254000 or roughly 50 basis points from the Blue Forge Alliance Welder training Grant we announced in July.
Chris: A $1 4 million increase from the same period of fiscal 2024.
Chris: Translating to <unk> 14 per diluted share.
As a reminder, the blue forge alliances a nonprofit that supports the U S Navy submarine industrial base.
On an adjusted basis, our net income grew 515000 to <unk> 18 per diluted share.
This $2 1 million grant supports our defense welder training program in Batavia and funds related equipment.
Chris: A 38% increase on a per share basis over the prior year.
Chris: Similarly, our adjusted EBITDA, which totaled $4 million for the third quarter increased 36% over the prior year.
To date, we have received $1 5 million of funding under this grant and expect to recognize the balanced in the next two quarters.
Chris: And it was eight 6% of sales for the quarter.
We are grateful for this partnership as we expand our capabilities and talent pipeline.
Chris: This adjusted EBITDA margin represented a 180 basis point improvement over the prior year.
Turning to slide seven you can see the strength of our earnings from the quarter and on a more historical basis.
Chris: While our SG&A expenses increased this quarter by <unk> 9 million.
GAAP net income for the third quarter reached one 6 million.
Chris: This rise was primarily due to our strategic investments in our people our processes and our technologies.
A $1 4 million increase from the same period of fiscal 2020 for.
Chris: This included costs associated with the implementation of a new ERP system at our Batavia facility and increased.
Translating to <unk> 14 per diluted share.
On an adjusted basis, our net income grew 515000 to <unk> 18 per diluted share.
Chris: <unk> level of R&D spend as well as increased cost of having a full quarter of <unk> technologies in our results that.
38% increase on a per share basis over the prior year.
Chris: That was acquired in November of 2023.
Chris: Overall, these investments position us well for future growth and support our long term objectives.
Similarly, our adjusted EBITDA, which totaled $4 million for the third quarter increased 36% over the prior year.
Chris: I should also point out that the supplemental performance bonus from the Barber Nickels acquisition was $1 1 million during the quarter or approximately 230 basis points of revenue.
And was eight 6% of sales for the quarter.
This adjusted EBITDA margin represented a 180 basis point improvement over the prior year.
Chris: And it will be completed at the end of fiscal 2026.
While our SG&A expenses increased this quarter by <unk> 9 million.
Chris: Our effective tax rate for the quarter was 29% and.
This rise was primarily due to our strategic investments in our people our processes and our technologies.
Chris: And 20% for the year to date period.
Chris: And can vary from quarter to quarter, depending on the level and the amount of projected income from our higher tax rate foreign subsidiaries.
This included costs associated with the implementation of a new ERP system at our Batavia facility in.
Chris: As well as the timing of discrete items.
An increased level of R&D spend as well as increased cost of having a full quarter of <unk> technologies in our results that.
Chris: The decrease in our effective tax rate for the first nine months of fiscal 2025 versus the prior year was primarily due to a discrete tax benefit recognized in the first quarter of fiscal 2025.
That was acquired in November of 2023.
Overall, these investments position us well for future growth and support our long term objectives.
Chris: Related to divesting of restricted stock awards.
I should also point out that the supplemental performance bonus from the Barber Nickels acquisition was $1 1 million during the quarter or approximately 230 basis points of revenue.
Chris: Partially offset by return to provision adjustments recognized in the third quarter of fiscal 2025 due to changes in estimates.
Chris: For the full year, we continue to expect our effective tax rate to be between 20% and 22%.
And we will be completed at the end of fiscal 2026.
Our effective tax rate for the quarter was 29% and.
Chris: Turning to slide eight you can see that our balance sheet remains strong with $30 million in cash and no outstanding debt at the end of the quarter.
And 20% for the year to date period.
And can vary from quarter to quarter, depending on the level and the amount of projected income from our higher tax rate foreign subsidiaries.
Chris: Additionally, we have $43 million available on our revolving credit facility, which provides us with significant financial flexibility to pursue our strategic growth initiatives.
As well as the timing of discrete items.
The decrease in our effective tax rate for the first nine months of fiscal 2025 versus the prior year.
Chris: For the quarter, our capital expenditures totaled $7 3 million and are focused on capacity expansion, increasing our capabilities and productivity enhancements.
Was primarily due to a discrete tax benefit recognized in the first quarter of fiscal 2025.
Related to the vesting of restricted stock awards.
Chris: Including investments and automated welding equipment and new machining centers.
Partially offset by return to provision adjustments recognized in the third quarter of fiscal 2025 due to changes in estimates.
For fiscal 2025, we now expect capital expenditures to be in the range of $15 million to $19 million.
For the full year, we continue to expect our effective tax rate to be between 2022%.
Chris: From the previous $13 million to $18 million that we guided to last quarter.
Chris: This includes several major projects that are all on time and on budget and included our opera opportunistic land purchase in our BARDA, Colorado, where we plan to expand Barbara Nickels operations in fiscal 2026.
Turning to slide eight you can see that our balance sheet remains strong with $30 million in cash and no outstanding debt at the end of the quarter.
Additionally, we have $43 million available on our revolving credit facility, which provides us with significant financial flexibility to pursue our strategic growth initiatives.
Chris: It also includes our cryogenic propellant testing facility, which remains on track to open in mid 2025.
Chris: And our customer supported supported defense expansion in Batavia in New York, which will support accelerated U S. Navy shipbuilding schedule and is also slated to open in mid 2025.
For the quarter, our capital expenditures totaled $7 3 million and are focused on capacity expansion, increasing our capabilities and productivity enhancements.
Including investments and automated welding equipment and new machining centers.
Chris: In pursuing these strategic growth initiatives.
Chris: On a go forward basis, we expect capex spend to be between 7% to 10% of revenue for the next several years, which includes maintenance capex of approximately $2 million per year.
For fiscal 2025, we now expect capital expenditures to be in the range of $15 million to $19 million.
From the previous $13 million to $18 million that we guided to last quarter.
This includes several major projects that are all on time and on budget and included our opera opportunistic land purchase in Arvada, Colorado, where we plan to expand Barbara Nickels operations in fiscal 2026.
Chris: I would also like to remind everyone that all of the major capital investments. We are pursuing have a return on investment that is greater than 20%.
Chris: Turning to slide nine as expected given the level of orders earlier in the fiscal year and the Lumpiness of our business orders.
It also includes our cryogenic propellant testing facility, which remains on track to open in mid 2025.
Chris: Orders declined to $24 8 million for the quarter.
And our customers supported supported defense expansion in Batavia in New York, which will support accelerated U S. Navy shipbuilding schedules and is also slated to open in mid 2025.
Chris: However orders for the nine month period ended December 31 2024.
Chris: Were $144 2 million and equated to a book to Bill ratio of one times revenue.
In pursuing these strategic growth initiatives on a go forward basis, we expect capex spend to be between 7% to 10% of revenue for the next several years, which includes maintenance capex of approximately $2 million per year.
Chris: Aftermarket aftermarket orders for the refining petrochemical and defense markets remain robust and totaled $13 million for the third quarter of fiscal 2025, an increase of 51% over the prior year.
I would also like to remind everyone that all of the major capital investments we are pursuing.
Chris: I am also pleased to report that the response to our Nextgen nozzle launched in October has been very positive and we have just received our second order.
Our return on investment that is greater than 20%.
Turning to slide nine as expected given the level of orders earlier in the fiscal year and the Lumpiness of our business orders.
Chris: We are actively pursuing multiple additional opportunities both domestically and internationally based upon our customers shutdown schedules and the attractiveness of our customers of this product given the significant energy and cost savings it delivers.
Orders declined to $24 8 million for the quarter.
However orders for the nine month period ended December 31, 2024 were $144 2 million and equated to a book to Bill ratio of one times revenue.
Chris: Orders for the first nine months of fiscal 2025 benefited from the large orders announced earlier this year.
Chris: That included a contract to provide cryogenic pumps for a space launch vehicles.
Aftermarket aftermarket orders for the refining petrochemical and defense markets remain robust and totaled $13 million for the third quarter of fiscal 2025, an increase of 51% over the prior year.
Chris: And a contract to provide the Mark 19 air turbine pump for the U S. Navy Columbia class submarine, which is a new program for us.
Chris: It also included a follow on order for the second option year of Alternators and regulators for their U S. Navy Mark 48 torpedo program.
I am also pleased to report that the response to our Nextgen nozzle launched in October has been very positive and we have just received our second order.
Chris: As well as in order for our three surface condenser system for the world's first net zero carbon emissions integrated ethylene cracker located in North America.
We are actively pursuing multiple additional opportunities both domestically and internationally based upon our customers shutdown schedules and the attractiveness of our customers of this product given the significant energy and cost savings it delivers.
Chris: Slide nine also highlights our significant backlog, which totaled $385 million as of December 31, due to our strong market position.
Orders for the first nine months of fiscal 2025 benefited from the large orders announced earlier this year that.
Chris: This backlog continues to provide us with excellent visibility into the future and ensures a high degree of operational stability.
That included a contract to provide cryogenic pumps for a space launch vehicle.
Chris: This backlog is being anchored by our defense business, which represented 80% of our backlog at December 31.
And a contract to provide the Mark 19 air turbine pump for the U S. Navy Columbia class submarine, which is a new program for us.
Chris: Also noteworthy is that our space backlog increased 59% over last year or nearly $7 million.
It also included a follow on order for the second option year of Alternators and regulators for their U S. Navy Mark 48 torpedo program.
Chris: We expect approximately 45% to 50% of our backlog to convert to sales within the next 12 months with an additional 35% to 40% projected for conversion over the following 12 months.
As well as in order for our three surface condenser system for the world's first net zero carbon emissions integrated ethylene cracker located in North America.
Chris: The majority of the backlog anticipated to convert beyond 12 months are from the defense sector, which are longer term in nature.
Slide nine also highlights our significant backlog, which totaled $385 million as of December 31, due to our strong market position.
Chris: On slide nine we are refining our guidance for fiscal 2025 from what we provided last quarter.
This backlog continues to provide us with excellent visibility into the future and ensures a high degree of operational stability.
Chris: We continue to anticipate revenue to be between $200 million and $210 million.
This backlog is being anchored by our defense business, which represented 80% of our backlog at December 31.
Chris: Which reflects projected topline growth of 11% over fiscal 2024 at the midpoint of this range.
Also noteworthy is that our space backlog increased 59% over last year or nearly $7 million.
Additionally, we continue to expect our adjusted EBITDA to be between 18 million and $21 million, implying 47% growth over the prior year and.
We expect approximately 45% to 50% of our backlog to convert to sales within the next 12 months.
Chris: And a nine 5% margin at the midpoint of the range.
With an additional 35% to 40% projected for conversion over the following 12 months.
Chris: Based upon the results to date and our better than expected gross margins, we are increasing our gross margin guidance to a range of 24% to 25%, which is up from the previously expected 23% to 24%.
The majority of the backlog anticipated to convert beyond 12 months are from the defense sector, which are longer term in nature.
On slide nine we are refining our guidance for fiscal 2025 from what we provided last quarter.
Chris: Other adjustments to our guidance include SG&A expense, which we know it.
Chris: Expect to be in the range of 18% to 19%.
We continue to anticipate revenue to be between $200 million and $210 million.
Chris: Up from 17% to 18% of sales guided to last quarter.
Which reflects projected topline growth of 11% over fiscal 2024 at the midpoint of this range.
Chris: This reflects continued investments in our people our processes and our technology.
Dan Dora: With that I will now turn the call back over to Dan for closing remarks.
Additionally, we continue to expect our adjusted EBITDA to be between 18 million and $21 million, implying 47% growth over the prior year and.
Dan Dora: Thanks, Chris on Slide 11, we would like to remind everyone of our strategic and operational priorities that will drive our long term success.
And a nine 5% margin at the midpoint of the range.
Our expanded R&D investments and capital programs are powering key growth initiatives with a target return on invested capital exceeding 20% for all of our major investments.
Based upon the results to date and our better than expected gross margins, we are increasing our gross margin guidance to a range of 24% to 25%, which is up from the previously expected 23% to 24%.
Dan Dora: These opportunities coupled with our strong balance sheet provides us with the flexibility to pursue growth both organically and inorganically as.
Other adjustments to our guidance include SG&A expense, which we now expect to be in the range of 18% to 19%.
Dan Dora: As we remain opportunistic for any potential strategic acquisitions.
Up from 17% to 18% of sales guided to last quarter.
Dan Dora: We are proud of what we've accomplished to date, but we still have a lot of work ahead of us to achieve our fiscal 2027 financial goals of 8% to 10% organic revenue growth per year and low to mid teens adjusted EBITDA margins.
This reflects continued investments in our people our processes and our technology.
With that I will now turn the call back over to Dan for closing remarks.
Thanks, Chris on Slide 11.
Dan Dora: The long term strategic plan, we have in place.
We would like to remind everyone of our strategic and operational priorities that will drive our long term success.
Dan Dora: Coupled with our culture of continuous improvement and.
Dan Dora: In our newly expanded executive team led by Matt gives me great confidence that we will hit those marks.
Our expanded R&D investments and capital programs are powering key growth initiatives with a target return on invested capital exceeding 20% for all of our major investments.
Dan Dora: With that we can now open the call for questions.
Speaker Change: Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
These opportunities coupled with our strong balance sheet provides us with the flexibility to pursue growth both organically and inorganically as.
Speaker Change: Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up the handset before pressing your sake.
As we remain opportunistic for any potential strategic acquisitions.
We are proud of what we've accomplished to date, but we still have a lot of work ahead of us to achieve our fiscal 2027 financial goals of 8% to 10% organic revenue growth per year and low to mid teens adjusted EBITDA margins.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Our first question from <expletive> Ryan with Oak Ridge Financial. Please proceed with your question.
Speaker Change: Thank you.
The long term strategic plan, we have in place.
Ryan: So I'd like to offer my congratulations Dan to both you and Matt on the next chapters that you're moving.
Coupled with our culture of continuous improvement.
Ryan: Moving onto with within Graham that sounds like an exciting opportunities for both of you. Both of you guys in the company. So congratulations on that front.
And our newly expanded executive team led by Matt gives me great confidence that we will hit those marks.
With that we can now open the call for questions.
Ryan: Yeah. Thanks, Nick thank.
Ryan: Thank you Dave.
Thank you we will now be conducting a question and answer session if.
Dan Dora: Dan we continue to hear challenges on the shipbuilding side of the market I think maybe last call.
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Confirmation tone will indicate your line is in the question queue.
Dan Dora: You indicated that you could see some potential opportunities as some other suppliers run into issues and.
You May press star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up the handset before pressing your sake.
Dan Dora: Then in your news release Youre talking about advanced discussions on new programs or expansions with existing customers can you kind of just square the circle on how that dynamic is playing out to you guys.
One moment, please while we poll for questions.
Our first question is from <expletive> Ryan with Oak Ridge Financial. Please proceed with your question.
Dan Dora: Yes.
Thank you.
Dan Dora: From a.
So I'd like to offer my congratulations Dan to both you and Matt on the next chapters that you're moving.
Dan Dora: A navy discussion point.
Dan Dora: Have regular program reviews with with our customers all the time.
Moving onto with within Graham that sounds like an exciting opportunities for both of you. Both you guys and the company. So congratulations on that front.
Dan Dora: And the message that we're getting from our customers is.
Dan Dora: Don't get don't get sidetracked by the noise.
Dan Dora: We have ships to build and and we will take your equipment as soon as you can get it get it to us we're not we're not talking about any slowdowns.
Yes, Thanks <expletive>.
Thank you Dave.
Dan we continue to hear challenges on the ship building side of the market I think maybe last call you indicated that you could see some potential opportunities as some other suppliers run into issues and then in your news release, you are talking about advanced discussions.
Dan Dora: Keep it coming and then as we're able to show that we're hitting our delivery schedules and showing that we're able to increase our capacity.
Dan Dora: Additional people additional.
On new programs or expansions with existing customers can you kind of just square the circle on on how that dynamic is playing out to you guys.
Dan Dora: Floor space.
Dan Dora: We're in discussions with our customers about what more we can do.
Dan Dora: Too early to say exactly what those opportunities are and what they will result in the future, but it's it's very positive conversation very productive conversation.
Yeah.
From a from a.
Navy discussion point.
Regular program reviews with with our customers all the time.
And the message that we're getting from our customers is.
Dan Dora: And so we're feeling very good about it.
Don't get don't get sidetracked by the noise.
Dan Dora: Okay.
Dan Dora: One other one on the aftermarket continue to show some very strong results there.
We have ships to build and and we will take your equipment as soon as you can get it get it to us we're not we're not talking about any slowdowns.
Dan Dora: It wasn't all that long ago that aftermarket was just going after the refining and Petro Chem side now you expanded into defense the strong growth, we're seeing over a year over year is that.
Keep it coming and then as we're able to show that we're hitting our delivery schedules and showing that we're able to increase our capacity.
Dan Dora: Defense kicking in or is that still too early or where is the strength coming from in the aftermarket yes.
Additional people additional.
Dan Dora: Yes, I would say the aftermarket still is is more on the energy and chemicals side you know.
Floor space.
We're in discussions with our customers about what more we can do.
Dan Dora: Our customers had told us that.
Too early to say exactly what those opportunities are and what they will result in the future but it's.
Dan Dora: That domestically they were definitely transitioning over to the maintenance mode.
Dan Dora: There's still a lot of demand for fuel refinery refined fuels and then feedstocks for Petro Chem.
It's very positive conversation very productive conversations.
And so we're feeling very good about it.
Dan Dora: So everybody is trying to keep their plants up running and going strong.
Okay.
One other one on the aftermarket continue to show some very strong results there.
Dan Dora: Seeing.
Dan Dora: Some additional <unk>.
And it wasn't all that long ago that aftermarket was just going after the refining and Petro Chem side now you expanded into defense I mean, the strong growth we're seeing over a year over year is that defense kicking in or is that still too early or where is the strength coming from in the aftermarket.
Dan Dora: Inquiries from our installed base internationally.
Dan Dora: So this next gen nozzle.
Dan Dora: That that we've recently announced and.
Dan Dora: Put into our plants here domestically.
Dan Dora: We've got our international customers now.
I would say the aftermarket still is more on the energy and chemical side.
Dan Dora: <unk> and saying gosh, we're really interested in that you know China has a big initiative to reduce their steam consumption.
<unk>.
Our customers had told us that.
Dan Dora: In India as they continue to grow.
Domestically they were definitely transitioning over to the maintenance mode.
Dan Dora: They want to see more and more efficiency just because.
There is still a lot of demand for fuel refiner refined fuels and then feedstocks for Petro Chem.
Dan Dora: It allows them to to grow smarter faster.
Dan Dora: And more efficiently. So so theres a lot of interest in this nextgen nozzle and so we're expecting to see even our installed base internationally too to really want to start to.
So everybody is trying to keep there.
Plants up running and going strong.
<unk>.
Some some additional.
<unk> from our installed base internationally.
Dan Dora: Bring that type of new technology.
So this next gen nozzle.
Dan Dora: And then on the defense side, certainly we're seeing.
That that we've recently announced and.
Dan Dora: Especially the U S Navy wanting to make sure that they've got.
Put into our plants here domestically.
We've got our international customers now.
Dan Dora: There.
Dan Dora: Theres submarines.
<unk> and saying gosh, we're really interested in that China has a big initiative to reduce their steam consumption.
Dan Dora: And so theres been a big push from the Navy to make sure that that we're getting this this equipment turned around.
In India as they continue to grow.
Dan Dora: And back to them quickly so that they can maintain availability.
They want to see more and more efficiency just because.
Dan Dora: As high as they can maintain it so all all really strong at this point for aftermarket <expletive>.
It allows them to to grow smarter faster.
Dan Dora: We're very pleased.
And more efficiently. So so theres a lot of interest in this nextgen nozzle and so we're expecting to see even our installed base internationally too to really want to start to.
Speaker Change: Okay, just quickly Chris mentioned, the second order for the next Gen model was that domestic or international.
Speaker Change: That one was domestic okay, great. Okay. Thanks again guys congratulations.
Bring that type of new technology.
Speaker Change: Thanks, Nick Thank you thanks, Nick.
And then on the defense side, certainly we're seeing.
Speaker Change: Thank you. Our next question is from Russell Stanley with Beacon Securities. Please proceed with your question.
Especially the U S Navy wanting to make sure that they've got.
Russell Stanley: Good morning, and thanks for taking my question just given the.
There.
Speaker Change: The order <unk>.
Theyre submarines.
Speaker Change: Penis and order flow, which is which is obviously quite natural if you look historically I am wondering.
And so theres been a big push from the Navy to make sure that.
That we're getting this this equipment turned around and back to them quickly. So that they can maintain availability is.
Speaker Change: Where you see your ideal book to Bill ratio being.
Speaker Change: Where is the best balance between.
Speaker Change: Driving sales growth, while ensuring reasonable lead times for customers.
As high as they can maintain it so all all really strong at this point for aftermarket deck and we're very pleased.
Speaker Change: Yeah, So our annual goal.
Okay, just quickly Chris mentioned, the second order for the Nexgen nozzle was that domestic or international.
Speaker Change: As you know our annual goal is to increase revenue, 8% to 10% organically per year right. So we always set a sales goal in order goal for ourselves of.
That one was domestic.
Great. Okay. Thanks again, guys. Congratulations thanks, Nick Thank you thanks, Nick.
Speaker Change: Book to Bill of one one times, which means that we're continually growing our backlog and our sales by that amount as you pointed out our orders tend to be lumpy.
Thank you. Our next question is from Russell Stanley with Beacon Securities. Please proceed with your question.
Good morning, and thanks for taking my question just given the.
Speaker Change: And our put our book to Bill ratio is one times for the year to date period, and I would also point out that our order.
The order numbers.
<unk> and order flow, which is which is obviously quite natural if you look historically I am wondering where you see your ideal book to bill ratio being.
Speaker Change: <unk> is very robust at this point in time, it's just lumpy as you pointed out.
Where is the best balance between.
Speaker Change: Yes, I think for us maybe a little bit more color on that.
Driving sales growth, while ensuring reasonable lead times for customers.
We are planning on and and aligning our future revenue to hit this 1.1, which basically means that we need to be able to recruit the people.
Yeah, So our annual goal Ross.
As you know our annual goal is to increase revenue, 8% to 10% organically per year right. So we always set a sales goal in order goal for ourselves of.
Speaker Change: And to have the facilities ready to support that one 1% growth.
Speaker Change: So we're very active in strategic planning and investments in our in our people our processes and our plans to.
Our book to Bill of one one times, which means that we're continually growing our backlog and our sales.
That amount as you pointed out our orders tend to be lumpy.
Speaker Change: Two.
Speaker Change: To support that.
In an ideal world where not.
And our put our book to Bill ratio is one times for the year to date period and I would also point out that our order pipeline is very robust at this point in time, it's just lumpy as you pointed out.
Speaker Change: Pushing out deliveries at all but actually improving deliveries and so theres a lot of activity.
Speaker Change: The planning strategic side to be able to support that.
Speaker Change: Okay.
Yes, I think for us maybe a little bit more color on that.
Speaker Change: That dovetails into my next question.
Speaker Change: Two major shipbuilders, just talk to ongoing supply chain challenges and labor challenges and I'm wondering.
We are planning on and aligning our future revenue to hit this one one which basically means that we need to be able to recruit the people and to have the facilities ready to support that one 1% growth.
Speaker Change: What youre seeing with given your plans, what youre seeing with respect to potential.
Speaker Change: Lending additional funding from going forward given the success you've had to date.
Speaker Change: Yeah. So.
Speaker Change: The government has said that they plan on continuing this supplier development funding for for several years still in the future.
So we're very active in strategic planning and investments in our in our people our processes in our plants to.
Two.
Speaker Change: And we are talking to to our customers about.
To support that.
Speaker Change: In an ideal world where not.
Speaker Change: Where is that next need where should we.
Speaker Change: Pushing out deliveries at all but but actually improving deliveries and so theres a lot of activity.
Speaker Change: Should we be planning to to invest ourselves as well as apply for.
Speaker Change: On the planning strategic side to be able to support that.
Speaker Change: For funds to to be able to expand capabilities and capacities.
Speaker Change: Okay got it.
Speaker Change: That dovetails into my next question.
Speaker Change: So.
Speaker Change: It's an active conversation we have several.
Speaker Change: Two major shipbuilders, just talk to ongoing supply chain challenges and labor challenges and Im wondering what youre seeing with given your plans what youre seeing with respect to potential funding.
Speaker Change: Reposal set in front of in front of our customers today.
Speaker Change: And we're just kind of waiting for them to sort it through I mean, they've got a lot of requests.
Speaker Change: Funding additional funding from going forwards given the success you've had to date.
Speaker Change: And they're just looking at it from from.
Our priority and a return on investment.
Speaker Change: Yeah. So.
Speaker Change: Kind of perspective, it really helps to have shovel ready projects.
Speaker Change: The government has.
Speaker Change: <unk> has said.
Speaker Change: That they plan on continuing this supplier development funding for for several years still in the future and we are talking to to our customers about where.
Speaker Change: And it really helps to have established.
Graham: Training programs in place, which Graham.
Speaker Change: It does have.
Speaker Change: So so we're cautiously optimistic that that.
Speaker Change: Where is that next need where should we.
This funding will continue to flow to Graham Corp.
Speaker Change: Should we be planning to to invest ourselves as well as apply for.
Speaker Change: That's great. That's all for me for now Thanks again and.
Speaker Change: For funds to to be able to expand capabilities and capacities.
Speaker Change: Congrats on the quarter.
Speaker Change: Thanks, Ross Thanks Ross.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question is from Tony Bancroft with Gabelli funds. Please proceed with your question.
Speaker Change: So.
Speaker Change: It's an active conversation we have several.
Speaker Change: Proposals in front of in front of our customers today.
Tony Bancroft: Yes, good morning, gentlemen.
Speaker Change: Nice job.
Speaker Change: And we're just kind of waiting for them to sort it through I mean, they've got a lot of requests.
Tony Bancroft: And your performance.
Tony Bancroft: Yes.
Tony Bancroft: <unk>.
Speaker Change: And they're just looking at it from from.
Tony Bancroft: Sort of a marine Corps.
Tony Bancroft: Luxury dinner the other night and the guest of honor was senior gentleman actually discussing the budget and talked about the supplemental potential for the $200 billion supplemental that is being kicked around.
Speaker Change: Our priority and a return on investment.
Speaker Change: Kind of perspective, it really helps to have shovel ready projects.
Speaker Change: And it really helps to have established.
Maybe question. One is you would you have any exposure and if so sort of what kind of exposure to that potential upside above 95, and then on the flip side. What are your thoughts of you also talk about downside of we don't get at April 30th.
Speaker Change: Training programs in place, which Graham.
Speaker Change: It does have.
Speaker Change: So so we're cautiously optimistic that that.
Speaker Change: This funding will continue to flow to Graham Corp.
Our budget then we go back to that as you know the 2023 minus 1% and then an impact of the CR, which I've heard that number the other never being kicked around that on the navy side of like negative almost $4 billion.
Speaker Change: That's great. That's all for me for now Thanks, again and congrats.
Speaker Change: Congrats on the quarter.
Ross: Thanks, Ross Thanks Ross.
Speaker Change: Thank you. Our next question is from Tony Bancroft with Gabelli funds. Please proceed with your question.
Tony Bancroft: Crts implemented.
Tony Bancroft: You guys are long term you have a long term program, which is a beautiful thing, but just just the impacts.
Speaker Change: Yes, good morning, gentlemen.
Speaker Change: Nice job.
Tony Bancroft: Puts and takes on those two dynamics.
Dan Dorian: On your performance.
Dan Dorian: Yes.
Tony Bancroft: Yes.
Dan Dorian: <unk>.
Tony Bancroft: At that kind of top line level. It it's really kind of hard to understand how it might come down in effect.
Dan Dorian: Sort of a marine Corps.
Dan Dorian: Luxury dinner the other night and the guest of honor was the senior gentleman actually discussing the budget and talked about the supplemental potential for the $200 billion supplemental that is being kicked around.
Speaker Change: Other programs.
Speaker Change: Youre right in that we feel very.
Speaker Change: We're fortunate that we're involved in some of the some of the most strategic programs of the U S. Navy has.
Dan Dorian: Maybe a question. One is you would you have any exposure and if so sort of what kind of exposure to that potential upside above 95 and then.
Speaker Change: And so given that we're often funded by advanced procurement types of funding that.
Dan Dorian: On the flip side what are your thoughts of you also talk about downside of we don't get in April 30th.
Dan Dorian: Budget, then we go back to that as you know the 2023 minus 1% and then an impact of the CR, which I've heard that number the other number being kicked around that on the navy side of like negative almost $4 billion.
Speaker Change: That is spent.
Speaker Change: Several years in advance of the actual ship being approved.
Speaker Change: We feel very very fortunate.
Speaker Change: But we have some visibility of that.
Dan Dorian: Crs implemented I know you guys are long term you have a long term program versus the beautiful thing, but just just the impacts.
Speaker Change: So.
Speaker Change: The supplemental.
Speaker Change: If theyre going to bump up overall.
Dan Dorian: It takes on those two dynamics.
Speaker Change: Defense spending that takes pressure off probably all programs.
Dan Dorian: Yes.
Dan Dorian: At that kind of top line level. It it's really kind of hard to understand how it might come down in effect.
Speaker Change: If we go into continuing resolution.
Speaker Change: What are you going to put more pressure on those on those programs that aren't as strategic.
Dan Dorian: Other programs.
Speaker Change: Youre right in that we feel very.
Speaker Change: Being able to look into that crystal ball and seeing what that what effect that might have on our specific programs.
Dan Dorian: Yes.
Dan Dorian: We're fortunate that we're involved in some of the some of the most strategic programs of the U S. Navy has.
Speaker Change: I'm not I'm not good enough to tell you that one.
Dan Dorian: And so given that we're often funded by advanced procurement types of funding that.
Speaker Change: Got it that's very helpful. Thank you and a great job and congratulations.
Dan Dora: Dan Dan Matt Mike looking forward to following follow up with you guys.
Dan Dorian: That is spent.
Speaker Change: Yes, Thanks, Tony Great. Thanks, Tony.
Several years in advance of the actual ship being approved.
Yes.
Dan Dorian: We feel very very fortunate that we have some visibility of that.
Speaker Change: Thank you. Our next question is from Joe Gomes with Noble capital markets. Please proceed with your question.
Dan Dorian: So.
Dan Dorian: The supplemental.
Speaker Change: Hey, guys. The Nacho just filling in for Joe.
Dan Dorian: If theyre going to bump up overall defense spending that takes pressure off probably all programs.
Hey, I just wanted to congratulate you guys, Dan Matt and Mike on the on the new roles and the transitions and looking forward to seeing you guys.
Dan Dorian: If we go into continuing resolution.
Speaker Change: What are you going to put more pressure on those on those programs that aren't as strategic.
Speaker Change: Our next story unfold for you.
Speaker Change: But.
Speaker Change: And just kind of you guys mentioned in your prepared remarks, obviously ongoing back into the order Lumpiness and just kind of looking just at the defense orders do you kind of seem lower than usually their usual trend.
Dan Dorian: Being able to look into that crystal ball and seeing what that what effect that might have on our specific programs.
Dan Dorian: I'm not good enough to tell you that one.
Speaker Change: Do you guys really have any kind of additional color and maybe to why that is.
Speaker Change: Got it that's very helpful. Thank you and great job and congratulations.
Speaker Change: While certainly versus the prior year, our orders are down because in the third quarter of last year, we had 100 million in.
And Dan Matt Mike looking forward to following follow up with you guys.
Dan Dorian: Yeah, Thanks, Tony Great. Thanks, Tony.
Dan Dorian: Yes.
Speaker Change: Orders related to some follow on orders for some of our the programs we're on.
Speaker Change: Thank you. Our next question is from Joe Gomes with Noble capital markets. Please proceed with your question.
Speaker Change: And typically we will get some of those once a year, we announced last quarter that we won the air turbine pump for the Columbia class submarine as well as the follow on order for the Mark 48 torpedo so.
Speaker Change: Hey, guys.
Speaker Change: So we'll just filling in for Joe.
Speaker Change: And just wanted to congratulate you guys, Dan Matt and Mike on the on the new holes in the transitions and looking forward to seeing you guys.
Speaker Change: Really just given.
Speaker Change: Next story unfolds for Ya.
Speaker Change: The long term nature and the large size of these contracts that just lends itself to be.
Speaker Change: But.
Speaker Change: And just kind of you guys mentioned in your prepared remarks, obviously ongoing back into the order Lumpiness and just kind of looking just at the defense orders do you kind of seem lower than usually their usual trend.
Speaker Change: Lumpy and.
Speaker Change: But we're not concerned with the order flow right now in the defense programs.
Speaker Change: Okay. That's helpful.
Speaker Change: Do you guys really have any kind of additional color and maybe Tim why that is.
Speaker Change: And kind of just.
Speaker Change: Moving along.
Speaker Change: You guys, usually mentioned before to chronic core targets from the M&A side of things.
Speaker Change: While certainly versus the prior year.
Speaker Change: Can you guys tell me a little bit maybe progression on that front and how the kind of the market's looking obviously with the new administration coming in and even a month ago. So just a little bit of an update on that front.
Speaker Change: Our orders are down because in the third quarter of last year, we had 100 million in.
Speaker Change: Orders related to some follow on orders for some of our the programs we're on.
Speaker Change: And typically we will get some of those once a year, we announced last quarter that we won the air turbine pump for the Columbia class submarine as well as the follow on order for the Mark 48 torpedo so.
Speaker Change: Yes.
Speaker Change: Maybe expand your question just a little bit more.
Speaker Change: Good morning.
Speaker Change: Do you think any potential targets, maybe on the M&A side that you guys are maybe looked at.
Speaker Change: Really just given.
Speaker Change: Okay.
Speaker Change: The long term nature and the large size of these contracts that just lends itself to be.
Alright, Okay, yes, so we have a pretty.
Speaker Change: Lumpy.
Speaker Change: A pretty active M&A.
Speaker Change: But we're not concerned with the order flow right now on the defense programs.
Speaker Change: Program going right now we are.
Speaker Change: Okay, Yes, that's helpful.
Speaker Change: We put out.
Speaker Change: Target disk.
Speaker Change: And kind of just.
Description of the types.
Speaker Change: Moving along.
Speaker Change: You guys, usually mentioned before Corona core targets from the M&A side of things.
Speaker Change: Of companies that we're looking for.
Speaker Change: We're actively on the road talking to.
Speaker Change: Can you guys tell me a little bit maybe progression on that front and how the kind of the market's looking obviously with the new administration coming in and even a month ago. So just a little bit of an update on that front.
Different companies about.
Speaker Change: What their plan is their openness to acquisition et cetera.
Speaker Change: So I would say that it's that it's actually a fairly active.
Speaker Change: I can't really comment on the pipeline per se.
Speaker Change: Yes.
Speaker Change: Maybe expand your question just a little bit more.
Speaker Change: But generally we really like engineered product.
Speaker Change: Good morning.
Speaker Change: We like companies that have engineered products that have some kind of an IP moat, some kind of a technology moat.
Speaker Change: Do you think any potential targets, maybe on the M&A side that you guys are maybe looked at.
Okay.
Speaker Change: And then what that allows you to do is really reinvent yourself.
Speaker Change: You want me to.
Speaker Change: Alright, Okay, yes, so we have a pretty.
Speaker Change: A pretty active M&A.
Speaker Change: So if you are capable of upgrading product and an improving its performance.
Speaker Change: Program going right now.
Speaker Change: Sure.
Speaker Change: Long term, that's a great place to be so that that innovation that that ability to reinvent yourself through engineered product and then manufacturing that.
Speaker Change: We put out.
Speaker Change: Target disk.
Speaker Change: Description of the types.
Speaker Change: Of companies that we're looking for.
Speaker Change: We're actively on the road talking to.
Speaker Change: Same product is also a nice place to be.
Speaker Change: Different companies about.
Speaker Change: What their plan is their openness to acquisition et cetera.
Speaker Change: Once you have it.
Speaker Change: Installed base, then you've got the aftermarket that goes with that so if you kind of painted the picture of the type of company we're looking for.
So I would say that is that it's actually a fairly active.
Speaker Change: I can't really comment on the pipeline per se.
It's a company that ultimately.
Speaker Change: But generally we really like engineered product.
Speaker Change: Enables us to continue to look at the full lifecycle.
Speaker Change: We like companies that have engineered product that have some kind of an IP moat, some kind of a technology moat.
Speaker Change: Some of the product with our customers it allows us to get in very early.
And then what that allows you to do is really reinvent yourself.
Speaker Change: And the conceptual design phase.
Speaker Change: And then support them all the way through with aftermarket.
Speaker Change: So if you're capable of upgrading product and an improving its performance.
Speaker Change: We had.
Speaker Change: Stated earlier that.
Speaker Change: Long term, that's a great place to be so that that innovation that that ability to reinvent yourself through engineered product and then manufacturing that that same products is also a nice place to be.
Speaker Change: We were kind of looking for companies.
Speaker Change: No.
Speaker Change: As small as maybe $10 million in revenue up to <unk>.
Speaker Change: Size of like the Barbara Nichols.
Speaker Change: Type of an acquisition, so those 70 or $80 million.
Speaker Change: Once you have it.
Speaker Change: Installed base, then you've got the aftermarket that goes with that so if you kind of painted the picture of the type of company we're looking for.
Speaker Change: You know as Chris talked about earlier, we've got a very strong balance sheet to be able to to go after those types of.
Speaker Change: Acquisitions.
Speaker Change: It's a company that ultimately.
Speaker Change: Again active there.
Speaker Change: <unk> enables us to continue to.
Speaker Change: We're on the road talking to two to companies.
Speaker Change: Look at the full lifecycle.
Speaker Change: That fit those attributes.
Speaker Change: Some of the product with our customers it allows us to get in very early.
Speaker Change: And pipelines too early to really talk about what's there today.
Speaker Change: In the conceptual design phase.
Speaker Change: Okay perfect. Thank you so much.
Speaker Change: And then support them all the way through with aftermarket.
Speaker Change: Yes.
Speaker Change: We had.
Speaker Change: <unk> stated earlier that.
Speaker Change: Thank you there are no further questions at this time I'd like to hand, the call back over to Daniel Cohen for any closing comments.
Speaker Change: We were kind of looking for companies.
Speaker Change: No.
Speaker Change: Hey, Thank you Paul.
Speaker Change: As small as maybe $10 million in revenue up to <unk>.
Daniel Cohen: Thank you everyone for joining us today and your interest in Graham.
Speaker Change: The size of like the Barbara Nichols.
Speaker Change: I'd like to remind you that we will.
Speaker Change: Type of an acquisition, so those 70 or $80 million.
Speaker Change: We'll be presenting at the <unk> and Aerospace and Defense Conference next week on February 12 in Arlington, Virginia.
Speaker Change: You know as Chris talked about earlier, we've got a very strong balance sheet to be able to go after those types of.
Speaker Change: As well as the Oppenheimer emerging growth conference being held virtually on February 25th in 'twenty six and then the Gabelli funds 35th annual pump valve and water Symposium in New York City on February 27th interested investors should contact your sales represent.
Speaker Change: Acquisitions.
Speaker Change: Again active there.
Speaker Change: We're on the road talking to two to companies.
Speaker Change: That fit those attributes.
Speaker Change: And pipelines too early to really talk about what's there today.
Speaker Change: To register and schedule, one on one or group meetings as always a live webcast of the presentation along with presentation materials will be available on our investors relations website, we hope to see you there and as always please reach out with any questions have a great rest of your day.
Speaker Change: Okay perfect. Thank you so much.
Speaker Change: Yes.
Thank you there are no further questions at this time I'd like to hand, the call back over to Daniel Cohen for any closing comments.
Daniel Cohen: Hey, Thank you Paul.
Daniel Cohen: Thank you everyone for joining us today and your interest in Graham.
Daniel Cohen: I'd like to remind you that we will be presenting at the TD Cowen Aerospace and Defense Conference next week on February 12.
Yeah.
Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Daniel Cohen: Arlington, Virginia.
Daniel Cohen: As well as the Oppenheimer emerging growth conference being held virtually on February 25th in 'twenty six and then the Gabelli funds 35th annual pump valve and water Symposium in New York City on February 27th interested investors should contact your sales represented.
Daniel Cohen: To register and schedule, a one on one or group meetings as always a live webcast of the presentation along with presentation materials will be available on our investors relations website, we hope to see you there and as always please reach out with any questions have a great rest of your day.
Daniel Cohen: Yeah.
Daniel Cohen: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Daniel Cohen: Okay.
Daniel Cohen: