Graham Q3 2026 Graham Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q3 2026 Graham Corp Earnings Call
Speaker #1: Greetings, and welcome to the
Operator: Greetings, and welcome to the Graham Corporation Q3 fiscal year 2026 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tom Cook, Investor Relations. Thank you, sir. You may begin.
Speaker #1: GRAHAM CORP 3rd Quarter Fiscal Year 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.
Speaker #1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
Speaker #1: It is now my pleasure to introduce your host, Tom Cook, Investor Relations. Thank you, sir. You may begin.
Speaker #2: Thank you, and good morning, everyone. Welcome to GRAHAM's fiscal third quarter 2026 earnings call. With me on the call today are Matt Malone, President and CEO, and Chris Thome, Chief Financial Officer.
Tom Cook: Thank you, and good morning, everyone. Welcome to Graham's fiscal Q3 2026 earnings call. With me on the call today are Matt Malone, President and CEO, and Chris Thome, Chief Financial Officer. This morning, we released our financial results. Our earnings release and accompanying presentation to today's call are available on our website at ir.grahamcorp.com. 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.... These risks and uncertainties and other factors are provided in the earnings release, as well as with other documents that are filed by the company with the Securities and Exchange Commission.
Moderator: Thank you, and good morning, everyone. Welcome to Graham's fiscal Q3 2026 earnings call. With me on the call today are Matt Malone, President and CEO, and Chris Thome, Chief Financial Officer. This morning, we released our financial results. Our earnings release and accompanying presentation to today's call are available on our website at ir.grahamcorp.com. 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.... These risks and uncertainties and other factors are provided in the earnings release, as well as with other documents that are filed by the company with the Securities and Exchange Commission.
Speaker #2: This morning, we released our financial results. Our earnings release and accompanying presentation to today's call are available on our website at ir.grahamcorp.com. You should be aware that we may make forward-looking statements during the formal discussion, as well as during the Q&A session.
Speaker #2: 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 #2: These risks and uncertainties, and other factors, are released, as well as with other documents that are filed by the company with the Securities and Exchange Commission.
Speaker #2: You can find these documents on are provided in the earnings our website or at sec.gov. During today's call, we will also discuss non-GAAP financial measures.
Tom Cook: You can find these documents on our website or at sec.gov. 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. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides. We also use key performance indicators to help gauge the progress and performance of the company. These key performance metrics are ROIC, orders, backlog, and book-to-bill ratio. These are operational measures, and a quantitative reconciliation of each is not required or provided. You can find a disclaimer regarding our use of KPIs at the back of today's presentation.
Moderator: You can find these documents on our website or at sec.gov. 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. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides. We also use key performance indicators to help gauge the progress and performance of the company. These key performance metrics are ROIC, orders, backlog, and book-to-bill ratio. These are operational measures, and a quantitative reconciliation of each is not required or provided. You can find a disclaimer regarding our use of KPIs at the back of today's presentation.
Speaker #2: 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 #2: We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today's release and slides. We also use key performance indicators to help gauge the progress and performance of the company.
Speaker #2: These key performance metrics are ROIC, orders, backlog, and book-to-bill ratio. These are operational measures, and a quantitative reconciliation of each is not required or provided.
Speaker #2: You can find a disclaimer regarding our use of KPIs at the back of today's presentation. So, with that, if you'll please advance to slide three, I'll turn the call over to Matt to begin.
Tom Cook: So with that, if you'll please advance to slide 3, I'll turn the call over to Matt to begin. Matt?
Moderator: So with that, if you'll please advance to slide 3, I'll turn the call over to Matt to begin. Matt?
Speaker #3: Thank you, Tom. And good morning,
Matthew Malone: Thank you, Tom, and good morning, everyone. We appreciate you joining us to review our Q3 fiscal 2026 results. We delivered another strong quarter, continuing to execute our strategy and demonstrate the resiliency and diversification of our business. Revenue increased 21% to $56.7 million, driven by solid performance across our end markets. Results were supported by the timing of key project milestones, particularly within our defense business, along with contributions from our new programs and continued growth across existing platforms. Adjusted EBITDA increased 50% to $6 million, with adjusted EBITDA margin of 10.7%. The year-over-year improvement in profitability reflects disciplined execution, ongoing productivity initiatives, and the scalability of our operating model as volumes continue to grow.
Matt Malone: Thank you, Tom, and good morning, everyone. We appreciate you joining us to review our Q3 fiscal 2026 results. We delivered another strong quarter, continuing to execute our strategy and demonstrate the resiliency and diversification of our business. Revenue increased 21% to $56.7 million, driven by solid performance across our end markets. Results were supported by the timing of key project milestones, particularly within our defense business, along with contributions from our new programs and continued growth across existing platforms. Adjusted EBITDA increased 50% to $6 million, with adjusted EBITDA margin of 10.7%. The year-over-year improvement in profitability reflects disciplined execution, ongoing productivity initiatives, and the scalability of our operating model as volumes continue to grow.
Speaker #3: Everyone, Matt. Our third quarter fiscal— We appreciate you joining us to review another strong quarter, continuing to execute our strategy and demonstrate the resiliency and diversification of our business in the Q3 2026 results.
Speaker #3: Revenue increased 21% to $56.7 million, driven by solid performance across our end markets. Results were supported by the timing of key project milestones, particularly within our defense business.
Speaker #3: Along with contributions from our new programs and continued growth across existing platforms, adjusted EBITDA increased 50% to $6 million, with an adjusted EBITDA margin of 10.7%.
Speaker #3: The year-over-year improvement in profitability reflects disciplined initiatives and the scalability of our operating model, as volumes continue to grow. Bookings remain strong during the quarter, resulting in a book-to-bill ratio of 1.3 times and driving backlog to a record $15.6 million, up 34% year-over-year. Ongoing productivity execution was strong throughout the quarter.
Matthew Malone: Bookings remained strong during the quarter, resulting in a book-to-bill ratio of 1.3 times and driving backlog to a record $1,515.6 million, up 34% year-over-year. Our backlog continues to provide excellent visibility, with approximately 35 to 40% expected to convert to revenue over the next 12 months. Finally, during the quarter, we completed the technology purchase of XDot Bearing Technologies, an engineering-led firm with patented foil bearing technology and deep expertise in high-speed rotating machinery. This acquisition strengthens our competitive position in an area where performance, reliability, and efficiency are becoming increasingly critical across aerospace, defense, energy transition, and industrial applications.
Matt Malone: Bookings remained strong during the quarter, resulting in a book-to-bill ratio of 1.3 times and driving backlog to a record $1,515.6 million, up 34% year-over-year. Our backlog continues to provide excellent visibility, with approximately 35 to 40% expected to convert to revenue over the next 12 months. Finally, during the quarter, we completed the technology purchase of XDot Bearing Technologies, an engineering-led firm with patented foil bearing technology and deep expertise in high-speed rotating machinery. This acquisition strengthens our competitive position in an area where performance, reliability, and efficiency are becoming increasingly critical across aerospace, defense, energy transition, and industrial applications.
Speaker #3: Our backlog continues to provide excellent visibility, with approximately 35% to 40% expected to convert to revenue over the next 12 months. Finally, during the quarter, we completed the technology purchase of XDOT bearing technologies.
Speaker #3: An engineering-led firm with patented foil bearing technology and deep expertise in high-speed rotating machinery. This acquisition strengthens our competitive position in an area where performance, reliability, and efficiency are becoming increasingly critical across aerospace, defense, energy transition, and industrial applications.
Speaker #3: XDOT's proprietary foil bearing designs deliver superior performance while reducing development and Barber-Nichols turbomachinery production costs. And, when combined, these capabilities significantly expand our ability to engineer and deliver advanced, high-speed pumps, compressors, and rotating machines.
Matthew Malone: XDot's proprietary foil bearing designs deliver superior performance while reducing development and production costs, and when combined with Barber-Nichols' turbomachinery capabilities, significantly expand our ability to engineer and deliver advanced high-speed pumps, compressors, and rotating machines. The integration of XDot into Barber-Nichols is going very well, and we are already leveraging their technology to win future opportunities. Turning now to our recent acquisition of FlackTek on slide 4. In late January, we completed the acquisition of FlackTek, a pioneer in advanced mixing and materials processing solutions, for a purchase price of $35 million, comprised of 85% cash and 15% equity. Additionally, there is an opportunity for additional performance-based earn-out of up to $25 million over the next four years.
Matt Malone: XDot's proprietary foil bearing designs deliver superior performance while reducing development and production costs, and when combined with Barber-Nichols' turbomachinery capabilities, significantly expand our ability to engineer and deliver advanced high-speed pumps, compressors, and rotating machines. The integration of XDot into Barber-Nichols is going very well, and we are already leveraging their technology to win future opportunities. Turning now to our recent acquisition of FlackTek on slide 4. In late January, we completed the acquisition of FlackTek, a pioneer in advanced mixing and materials processing solutions, for a purchase price of $35 million, comprised of 85% cash and 15% equity. Additionally, there is an opportunity for additional performance-based earn-out of up to $25 million over the next four years.
Speaker #3: The integration of XDOT into Barber-Nichols is going very well, and we are already leveraging their technology to win future opportunities. Turning now to our recent acquisition four.
Speaker #3: In late January, we completed the acquisition of Flaktek, a pioneer in advancing advanced mixing and materials processing solutions, for $35 million.
Speaker #3: For a purchase price in dollars, comprised of 85% cash and 15% equity. Additionally, there is an opportunity for an additional performance-based earnout of up to $25 million over the next four years.
Speaker #3: The transaction was structured to align incentives, generate attractive returns, and preserve balance sheet flexibility, while bringing into GRAHAM a highly differentiated and scalable engineered products business.
Matthew Malone: The transaction was structured to align incentives, generate attractive returns, and preserve balance sheet flexibility while bringing into Graham a highly differentiated and scalable engineered products business. FlackTek adds advanced materials and processing as a third core technology platform for Graham, alongside our existing strengths in vacuum, heat transfer, and high-speed turbomachinery. The company is a recognized leader in high-performance, bladeless centrifugal mixing, serving mission-critical applications across defense, space, energy, and process in a broad range of advanced industrial markets. With approximately $30 million of annual revenue and more than 2,500 units installed globally and a deep portfolio of proprietary intellectual property, FlackTek brings both scale and durability to our portfolio.
Matt Malone: The transaction was structured to align incentives, generate attractive returns, and preserve balance sheet flexibility while bringing into Graham a highly differentiated and scalable engineered products business. FlackTek adds advanced materials and processing as a third core technology platform for Graham, alongside our existing strengths in vacuum, heat transfer, and high-speed turbomachinery. The company is a recognized leader in high-performance, bladeless centrifugal mixing, serving mission-critical applications across defense, space, energy, and process in a broad range of advanced industrial markets. With approximately $30 million of annual revenue and more than 2,500 units installed globally and a deep portfolio of proprietary intellectual property, FlackTek brings both scale and durability to our portfolio.
Speaker #3: Flaktek adds leverage, adds advanced materials and processing as a third core technology platform for Graham. Alongside our existing strengths in vacuum, heat transfer, and high-speed turbomachinery.
Speaker #3: The company is a recognized leader in high-performance, bladeless centrifugal mixing, serving mission-critical applications across defense, space, energy and process, and a broad range of advanced industries. With approximately $30 million of annual revenue, and more than 1,200 or 2,500 units installed globally, and a deep portfolio of proprietary intellectual property, Flaktek brings both scale and durability to our portfolio.
Speaker #3: Additionally, Flaktek will bring our overall revenue mix closer to our long-term goal of 50% defense and 50% commercial, as approximately 60% of their sales are into the energy and process market, 15% to defense, and 10% to the space market.
Matthew Malone: Additionally, FlackTek will bring our overall revenue mix closer to our long-term goal of 50% defense and 50% commercial, as approximately 60% of their sales are into the energy and process market, 15% to defense, and 10% to the space market. A key element of FlackTek's value proposition is its large and growing installed base, which drives predictable, recurring demand for consumables, accessories, and services. This creates enhanced revenue visibility, strong customer retention, and attractive lifetime value economics, while complementing Graham's existing engineered-to-order and project-based businesses. Within the FlackTek portfolio, the Mega product line stands out as a category-defining platform with the potential to meaningfully expand Graham's addressable market. Mega is the world's only production-scale, bladeless, dual asymmetric centrifugal mixer, capable of processing multi-hundred kilogram batches and in a 55-gallon drum format....
Matt Malone: Additionally, FlackTek will bring our overall revenue mix closer to our long-term goal of 50% defense and 50% commercial, as approximately 60% of their sales are into the energy and process market, 15% to defense, and 10% to the space market. A key element of FlackTek's value proposition is its large and growing installed base, which drives predictable, recurring demand for consumables, accessories, and services. This creates enhanced revenue visibility, strong customer retention, and attractive lifetime value economics, while complementing Graham's existing engineered-to-order and project-based businesses. Within the FlackTek portfolio, the Mega product line stands out as a category-defining platform with the potential to meaningfully expand Graham's addressable market. Mega is the world's only production-scale, bladeless, dual asymmetric centrifugal mixer, capable of processing multi-hundred kilogram batches and in a 55-gallon drum format....
Speaker #3: A key element of Flaktek's value proposition is its large and growing install base, which drives predictable, recurring demand for consumables, accessories, and services. This creates enhanced revenue visibility, strong customer retention, and attractive lifetime value economics.
Speaker #3: While complementing GRAHAM's existing engineered-to-order and project-based businesses, within the Flaktek portfolio, the mega product line stands out as a category-defining platform, with the potential to meaningfully expand GRAHAM's addressable market.
Speaker #3: Mega is the world’s only production-scale, bladeless, dual-asymmetric centrifugal mixer capable of processing multi-hundred-kilogram batches and in a 55-gallon drum format. It delivers a step change in manufacturing throughput, enabling customers to reduce mixing cycles from hours to minutes while maintaining exceptional precision, repeatability, and quality consistency at scale.
Matthew Malone: It delivers a step change in manufacturing throughput, enabling customers to reduce mixing cycles from hours to minutes, while maintaining exceptional precision, repeatability, and quality consistency at scale. The Mega platform has been production validated in mission-critical, safety-sensitive applications, and offers compelling customer economics through faster cycle times, smaller footprints, improved capacity utilization, and lower unit costs. Demand for this large-scale mixing platform is strong, with multiple use cases across the value chain and significant expansion opportunities within FlackTek's existing customer base. Strategically, this acquisition significantly enhances Graham's ability to solve increasingly complex customer challenges that require integrated solutions across multiple disciplines. FlackTek's technology fits naturally alongside Barber-Nichols turbomachinery and Graham Manufacturing's vacuum and heat transfer systems, allowing us a more comprehensive, differentiated engineering solutions platform.
Matt Malone: It delivers a step change in manufacturing throughput, enabling customers to reduce mixing cycles from hours to minutes, while maintaining exceptional precision, repeatability, and quality consistency at scale. The Mega platform has been production validated in mission-critical, safety-sensitive applications, and offers compelling customer economics through faster cycle times, smaller footprints, improved capacity utilization, and lower unit costs. Demand for this large-scale mixing platform is strong, with multiple use cases across the value chain and significant expansion opportunities within FlackTek's existing customer base. Strategically, this acquisition significantly enhances Graham's ability to solve increasingly complex customer challenges that require integrated solutions across multiple disciplines. FlackTek's technology fits naturally alongside Barber-Nichols turbomachinery and Graham Manufacturing's vacuum and heat transfer systems, allowing us a more comprehensive, differentiated engineering solutions platform.
Speaker #3: The mega platform has been production-validated for mission-critical, safety-sensitive applications and offers compelling customer economics through faster cycle times, smaller footprints, improved capacity utilization, and lower unit costs.
Speaker #3: Demand for this large-scale mixing platform is strong, with multiple use cases across the value chain and significant expansion opportunities within Flaktek's existing customer base.
Speaker #3: Strategically, this acquisition significantly enhances GRAHAM's ability to solve increasingly complex customer challenges that require integrated solutions across multiple disciplines. Flaktek's technology fits naturally alongside Barber-Nichols turbomachinery and GRAHAM Manufacturing's vacuum and heat transfer systems.
Speaker #3: Allowing us a more comprehensive, differentiated engineering solutions platform. Together, these capabilities span the full value chain, from formulation and upstream processing through downstream production and quality control.
Matthew Malone: Together, these capabilities span the full value chain, from formulation and upstream processing through downstream production and quality control, where precision, repeatability, and performance are critical. Most importantly, FlackTek aligns with our defined M&A criteria that we have outlined for a few years now. That is, a modern engineered product portfolio, process-critical applications, a predominantly domestic customer base, strong leadership continuity, and clear opportunities for long-term organic growth and margin expansion. We believe this acquisition meaningfully strengthens Graham's competitive positioning, enhances the durability and visibility of our revenue base, and supports sustained value creation for shareholders long term. We are really excited to have the entire FlackTek team as part of Graham. Turning to organic investments on Slide 8. We continue to make disciplined, high-return investments across the business that are now translating into tangible operating capabilities for future growth.
Matt Malone: Together, these capabilities span the full value chain, from formulation and upstream processing through downstream production and quality control, where precision, repeatability, and performance are critical. Most importantly, FlackTek aligns with our defined M&A criteria that we have outlined for a few years now. That is, a modern engineered product portfolio, process-critical applications, a predominantly domestic customer base, strong leadership continuity, and clear opportunities for long-term organic growth and margin expansion. We believe this acquisition meaningfully strengthens Graham's competitive positioning, enhances the durability and visibility of our revenue base, and supports sustained value creation for shareholders long term. We are really excited to have the entire FlackTek team as part of Graham. Turning to organic investments on Slide 8. We continue to make disciplined, high-return investments across the business that are now translating into tangible operating capabilities for future growth.
Speaker #3: Where precision, repeatability, and performance are critical. Most importantly, Flaktek aligns with our defined M&A criteria that we have outlined for a few years now.
Speaker #3: That is, a moated, engineered product applications, a predominantly domestic customer base, strong leadership continuity, and clear opportunities for long-term organic growth and margin expansion.
Speaker #3: We believe this acquisition meaningfully strengthens GRAHAM's competitive positioning, enhances the durability and visibility of our revenue base, and supports sustained value creation for shareholders long-term.
Speaker #3: We are really excited to have the entire Flaktek team as part of GRAHAM. Turning to organic investments on slide eight, we continue to make disciplined, high-return investments across the business that are now translating into tangible operating capabilities for future growth.
Matthew Malone: Importantly, many of the strategic expansion projects we have discussed over the past several quarters are now completed or entering the final stages of commissioning. Positioning as well as demand across our end markets remains strong. Starting with defense, we completed our new Navy manufacturing facility in Batavia, New York, during Q2 of fiscal 2026. This $17.6 million expansion, supported by a $13.5 million customer grant, significantly expands our capacity and capabilities to support critical US Navy programs. The facility is purpose-built for efficiency, precision, and scale, and incorporates automated welding, optimized product flow, and advanced manufacturing processes. In addition, our automated welding machines are now fully installed and commissioned, and our new X-ray inspection facility in Batavia remains on track for completion later this fiscal year.
Matt Malone: Importantly, many of the strategic expansion projects we have discussed over the past several quarters are now completed or entering the final stages of commissioning. Positioning as well as demand across our end markets remains strong. Starting with defense, we completed our new Navy manufacturing facility in Batavia, New York, during Q2 of fiscal 2026. This $17.6 million expansion, supported by a $13.5 million customer grant, significantly expands our capacity and capabilities to support critical US Navy programs. The facility is purpose-built for efficiency, precision, and scale, and incorporates automated welding, optimized product flow, and advanced manufacturing processes. In addition, our automated welding machines are now fully installed and commissioned, and our new X-ray inspection facility in Batavia remains on track for completion later this fiscal year.
Speaker #3: Projects we have discussed over the past several quarters are now, importantly, many of the strategic expansion projects are completed or entering the final stages of commissioning.
Speaker #3: Positioning as well as demand across our end markets remains strong. Starting with defense, we completed our new Navy manufacturing facility in Batavia, New York in 2026.
Speaker #3: This $17.6 million expansion, supported by a York, during the second quarter of fiscal, and a $13.5 million customer grant, significantly expands our capacity and capabilities to support critical U.S.
Speaker #3: Navy programs. The facility is purpose-built for efficiency, precision, and scale, and incorporates automated welding, optimized product flow, and advanced manufacturing processes. In addition, our automated welding machines are now fully X-ray inspected. The inspection facility in Batavia remains on track for completion later this fiscal year.
Speaker #3: Together, these investments materially enhance throughput, improve quality, and strengthen our ability to execute against long-cycle installed and commissioned, and our new Navy programs, with increasing production. The renovation of our assembly and test facility in our Bataa, Colorado, earlier this fiscal year.
Matthew Malone: Together, these investments materially enhance throughput, improve quality, and strengthen our ability to execute against long cycle Navy programs with increasing production requirements. In energy and process, we completed the renovation of our assembly and test facility in Arvada, Colorado, earlier this fiscal year. That site is now fully operational with both product and personnel in place, providing increased flexibility and improved execution for capital projects and aftermarket work. During the quarter, we also kicked off an aftermarket acceleration initiative, leveraging AI tools to improve responsiveness, pricing, and service penetration. In parallel, we expanded and consolidated our engineering and service process footprint in India, strengthening our global operating model and improving cost efficiency and scalability over time. From a market perspective, we are seeing some slowing as it relates to large CapEx purchases, driven by lower oil prices, tariffs, and uncertain, like, macro environment.
Matt Malone: Together, these investments materially enhance throughput, improve quality, and strengthen our ability to execute against long cycle Navy programs with increasing production requirements. In energy and process, we completed the renovation of our assembly and test facility in Arvada, Colorado, earlier this fiscal year. That site is now fully operational with both product and personnel in place, providing increased flexibility and improved execution for capital projects and aftermarket work. During the quarter, we also kicked off an aftermarket acceleration initiative, leveraging AI tools to improve responsiveness, pricing, and service penetration. In parallel, we expanded and consolidated our engineering and service process footprint in India, strengthening our global operating model and improving cost efficiency and scalability over time. From a market perspective, we are seeing some slowing as it relates to large CapEx purchases, driven by lower oil prices, tariffs, and uncertain, like, macro environment.
Speaker #3: That site is now fully operational, with both product and personnel in place, providing increased flexibility and improved execution for capital projects and aftermarket work.
Speaker #3: During the quarter, we also kicked off an aftermarket acceleration initiative, leveraging AI tools to improve responsiveness, pricing, and service penetration. In parallel, we expanded and consolidated our engineering and service footprint in India, strengthening our global operating model and improving cost efficiency and scalability over time.
Speaker #3: From a market perspective, we are seeing some slowing as it relates to large CapEx purchases, driven by lower oil prices, tariffs, and an uncertain macro environment.
Speaker #3: Lastly, in Space, we reached several important milestones. Our liquid beta was completed in the second nitrogen testing capability in our quarter, with the first unit customer.
Matthew Malone: Lastly, in space, we reached several important milestones. Our liquid nitrogen testing capability in Arvada was completed in the second quarter, with the first unit successfully tested and delivered to our end customer. More recently, during the fourth quarter, we completed construction of our new cryogenic test facility in Jupiter, Florida. That facility is now entering commissioning, which will continue through the end of this fiscal year. These investments meaningfully expand our in-house testing capability and capacity, enabling us to support customers as programs transition from development into higher rate production. As we step back, the common thread across everything we've discussed this morning is disciplined execution. We are delivering strong operating results today, while at the same time making deliberate, organic, and inorganic investments that expand our capabilities, deepen customer relationships, and position Graham for long-term growth.
Matt Malone: Lastly, in space, we reached several important milestones. Our liquid nitrogen testing capability in Arvada was completed in the second quarter, with the first unit successfully tested and delivered to our end customer. More recently, during the fourth quarter, we completed construction of our new cryogenic test facility in Jupiter, Florida. That facility is now entering commissioning, which will continue through the end of this fiscal year. These investments meaningfully expand our in-house testing capability and capacity, enabling us to support customers as programs transition from development into higher rate production. As we step back, the common thread across everything we've discussed this morning is disciplined execution. We are delivering strong operating results today, while at the same time making deliberate, organic, and inorganic investments that expand our capabilities, deepen customer relationships, and position Graham for long-term growth.
Speaker #3: More recently, during the fourth quarter, we completed construction of our new cryogenic test facility in Jupiter, Florida. That facility is now entering commissioning, which will continue through the end of this fiscal year.
Speaker #3: These investments meaningfully expand our in-house testing, enabling us to support customers' capability and capacity as programs transition from development into higher rate production. As we step back, the common thread across everything we've discussed this morning is discipline, successfully tested and delivered to our end execution.
Speaker #3: We are delivering strong operating results today, while at the same time making deliberate organic and inorganic investments that expand our capabilities, deepen customer relationships, and position GRAHAM for long-term growth.
Speaker #3: Our record backlog provides meaningful visibility; our balance sheet remains strong and flexible; and our investments are aligned where our customers' needs are headed. The acquisition of Flaktek meaningfully strengthens our technology.
Matthew Malone: Our record backlog provides meaningful visibility, our balance sheet remains strong and flexible, and our investments are aligned where our customers' needs are headed. The acquisition of FlackTek meaningfully strengthens our technology platform and expands our ability to serve mission-critical applications across multiple end markets, while our organic investments are now coming online and enhance our throughput, quality, and scalability across the entire business. Together, these initiatives reinforce our confidence in Graham's ability to grow organically, expand margins over time, and continue to increase shareholder value. In short, we continue to do what we said we were going to do, steady progress while getting better every day through continuous improvement. With that, I'll turn the call over to Chris for a detailed review of our financial results. Chris?
Matt Malone: Our record backlog provides meaningful visibility, our balance sheet remains strong and flexible, and our investments are aligned where our customers' needs are headed. The acquisition of FlackTek meaningfully strengthens our technology platform and expands our ability to serve mission-critical applications across multiple end markets, while our organic investments are now coming online and enhance our throughput, quality, and scalability across the entire business. Together, these initiatives reinforce our confidence in Graham's ability to grow organically, expand margins over time, and continue to increase shareholder value. In short, we continue to do what we said we were going to do, steady progress while getting better every day through continuous improvement. With that, I'll turn the call over to Chris for a detailed review of our financial results. Chris?
Speaker #3: platform and expands our ability to serve mission-critical applications across multiple end markets. While our organic investments are now coming online and enhance our throughput, quality, and scalability across the entire business.
Speaker #3: Together, these initiatives reinforce our confidence in expanding margins over time and continue to increase shareholder value. In short, we continue to do what we said we were going to do.
Speaker #3: Steady progress while getting better every day through continuous improvement. With that, I'll turn the call over to Chris for a detailed review of our financial results.
Speaker #3: Chris?
Speaker #2: Thanks, Matt. And good morning, everyone. I will begin my review of our third quarter results on slide 10. For the third quarter of fiscal 2026, revenue was $56.7 million, an increase of 21% compared to the prior year.
Christopher Thome: Thanks, Matt, and good morning, everyone. I will begin my review of our Q3 results on slide 10. For the Q3 of fiscal 2026, revenue was $56.7 million, an increase of 21% compared to the prior year, reflecting continued strong execution across our diversified end markets. Sales to the defense market increased by $8.3 million, driven by the timing of project milestones, contributions from new programs, better pricing, and growth across existing programs. Sales to the energy and process market increased $2.1 million, or 13%, reflecting continued strength in aftermarket sales, as well as momentum in our new energy markets, and, in particular, SMRs.
Chris Thome: Thanks, Matt, and good morning, everyone. I will begin my review of our Q3 results on slide 10. For the Q3 of fiscal 2026, revenue was $56.7 million, an increase of 21% compared to the prior year, reflecting continued strong execution across our diversified end markets. Sales to the defense market increased by $8.3 million, driven by the timing of project milestones, contributions from new programs, better pricing, and growth across existing programs. Sales to the energy and process market increased $2.1 million, or 13%, reflecting continued strength in aftermarket sales, as well as momentum in our new energy markets, and, in particular, SMRs.
Speaker #2: Reflecting continued strong execution across our diversified end markets. Sales to the defense market increased by $8.3 million, driven by the timing of project milestones, contributions from new programs, better pricing, and growth across existing programs.
Speaker #2: Sales to the energy and process market increased $2.1 million, or 13%, reflecting continued strength in aftermarket sales as well as momentum in our new energy markets.
Speaker #2: And in particular, SMRs. Aftermarket sales to the energy, process, and defense markets were $10.8 million, up 11% over the prior year period, continuing to demonstrate demand across our global installed base.
Christopher Thome: Aftermarket sales to the energy, process, and defense market were $10.8 million, up 11% over the prior year period, continuing to demonstrate demand across our global installed base. Turning to slide 11, gross profit increased 15% to $13.5 million, and gross margin was 23.8% for the quarter. The year-over-year margin decline of 100 basis points reflects sales mix, which included a higher level of material receipts, which carry lower margins. In addition, the prior year period benefited $255,000 from the Blue Forge Alliance grant that did not repeat in this year's quarter. Finally, for the first nine months of fiscal 2026, we estimate that tariffs have impacted results by approximately $1 million, with minimal impact in Q3.
Chris Thome: Aftermarket sales to the energy, process, and defense market were $10.8 million, up 11% over the prior year period, continuing to demonstrate demand across our global installed base. Turning to slide 11, gross profit increased 15% to $13.5 million, and gross margin was 23.8% for the quarter. The year-over-year margin decline of 100 basis points reflects sales mix, which included a higher level of material receipts, which carry lower margins. In addition, the prior year period benefited $255,000 from the Blue Forge Alliance grant that did not repeat in this year's quarter. Finally, for the first nine months of fiscal 2026, we estimate that tariffs have impacted results by approximately $1 million, with minimal impact in Q3.
Speaker #2: Turning to slide 11, gross profit was $13.5 million, and gross profit increased 15%. Gross margin was 23.8% for the quarter. The year-over-year margin decline of 100 basis points reflects sales mix, which included a higher level of material receipts.
Speaker #2: which carry lower margins. In addition, the prior year period benefited $255,000 from the Blue Forge Alliance grant that did not repeat in this year's quarter.
Speaker #2: Finally, for the first nine months of fiscal 2026, we estimate that tariffs have impacted results by approximately $1 million, with minimal impact in the third quarter.
Speaker #2: For the full year, we have narrowed our expected tariff impact to be between $1 million to $1.5 million, reflecting continued sourcing discipline, our established in-country partnerships, and contractual protections.
Christopher Thome: For the full year, we have narrowed our expected tariff impact to be between $1 to 1.5 million, reflecting continued sourcing discipline, our established in-country partnerships, and contractual protections. Our teams have really done an excellent job navigating this uncertain environment. On slide 12, as you can see, this operating performance continues to translate into strong bottom-line results. Net income for the quarter was $0.25 per diluted share, and adjusted net income was $0.31 per diluted share. Adjusted EBITDA increased 50% to $6 million, and our adjusted EBITDA margin was 10.7%, reflecting improved operating leverage and disciplined cost control.
Chris Thome: For the full year, we have narrowed our expected tariff impact to be between $1 to 1.5 million, reflecting continued sourcing discipline, our established in-country partnerships, and contractual protections. Our teams have really done an excellent job navigating this uncertain environment. On slide 12, as you can see, this operating performance continues to translate into strong bottom-line results. Net income for the quarter was $0.25 per diluted share, and adjusted net income was $0.31 per diluted share. Adjusted EBITDA increased 50% to $6 million, and our adjusted EBITDA margin was 10.7%, reflecting improved operating leverage and disciplined cost control.
Speaker #2: Our teams have really done an excellent job navigating this uncertain environment. On slide 12, as you can see, this operating performance continues to translate into strong bottom-line results.
Speaker #2: Net income for the quarter was $25 per diluted share, and adjusted net income was $31 per diluted share. Adjusted EBITDA increased 50% to $6 million.
Speaker #2: And our adjusted EBITDA margin was 10.7%, reflecting improved operating leverage and disciplined cost control. On a year-to-date basis, adjusted EBITDA margin for fiscal year 2026 was 10.8%, up 100 basis points over the prior year period, and in line with our updated full-year guidance, which I will speak to in a few minutes.
Christopher Thome: On a year-to-date basis, Adjusted EBITDA margin for fiscal year 2026 was 10.8%, up 100 basis points over the prior year period, and in line with our updated full-year guidance, which I will speak to in a few minutes. As expected, SG&A increased year-over-year due to continuing investments in our operations, our technology, and our people, as well as higher acquisition and integration costs related to the XDot and FlackTek acquisitions. However, as a percentage of sales, SG&A declined 200 basis points to 18.6%, which demonstrates our financial discipline and higher net sales throughout the fiscal year. Moving to slide 13, orders remained strong in the quarter, totaling $71.7 million. This strength was driven by strong demand in the defense and space markets.
Chris Thome: On a year-to-date basis, Adjusted EBITDA margin for fiscal year 2026 was 10.8%, up 100 basis points over the prior year period, and in line with our updated full-year guidance, which I will speak to in a few minutes. As expected, SG&A increased year-over-year due to continuing investments in our operations, our technology, and our people, as well as higher acquisition and integration costs related to the XDot and FlackTek acquisitions. However, as a percentage of sales, SG&A declined 200 basis points to 18.6%, which demonstrates our financial discipline and higher net sales throughout the fiscal year. Moving to slide 13, orders remained strong in the quarter, totaling $71.7 million. This strength was driven by strong demand in the defense and space markets.
Speaker #2: As expected, SG&A increased year over year due to continued investments in our operations, our technology, and our people, as well as higher acquisition and integration costs related to the XDOT and Flaktek acquisitions.
Speaker #2: However, as a percentage of sales, SG&A declined 200 basis points to 18.6%, which demonstrates our financial discipline and higher net sales throughout the fiscal year.
Speaker #2: Moving to slide 13, orders remain strong in the quarter, totaling $71.7 million. This strength was driven by strong markets, energy demand in the defense and space. The quarter, as lower aftermarket orders and delay in large capital projects due to the macro environment, were almost orders.
Christopher Thome: Energy and process orders were down slightly during the quarter, as lower aftermarket orders and delay in large capital projects due to the macro environment were almost entirely offset by growth in new energy orders. Again, in particular, SMRs. The resulting book-to-bill ratio was 1.3 times, and backlog increased to a record $515.6 million, up 34% year-over-year. Roughly 85% of backlog is attributable to the defense market, which adds stability and predictability to our business. Approximately 35% to 40% of our backlog is expected to convert to revenue over the next 12 months, with another 25% to 30% converting within 1 to 2 years, providing meaningful visibility into future revenue. As a reminder, our orders remain inherently lumpy due to the multiyear nature of many defense programs and large commercial projects.
Chris Thome: Energy and process orders were down slightly during the quarter, as lower aftermarket orders and delay in large capital projects due to the macro environment were almost entirely offset by growth in new energy orders. Again, in particular, SMRs. The resulting book-to-bill ratio was 1.3 times, and backlog increased to a record $515.6 million, up 34% year-over-year. Roughly 85% of backlog is attributable to the defense market, which adds stability and predictability to our business. Approximately 35% to 40% of our backlog is expected to convert to revenue over the next 12 months, with another 25% to 30% converting within 1 to 2 years, providing meaningful visibility into future revenue. As a reminder, our orders remain inherently lumpy due to the multiyear nature of many defense programs and large commercial projects.
Speaker #2: Again, in particular, entirely offset by growth in new energy SMRs. The resulting book-to-bill ratio was 1.3 times, and backlog increased to a record $515.6 million.
Speaker #2: Up 34% year over year. Roughly 85% of backlog is attributable to the defense market, which adds stability and predictability. About 40% of our backlog is expected to convert to revenue over the next 12 months, with another 25% to 30% converting within one to two years.
Speaker #2: Providing meaningful visibility into future revenue. As a reminder, our orders remain inherently lumpy due to the multi-year nature of many defense programs and large commercial projects.
Speaker #2: Over the long term, we target a book-to-bill ratio of approximately 1.1 times to support our growth objective of 8% to 10% organic growth per year.
Christopher Thome: Over the long term, we target a book-to-bill ratio of approximately 1.1 times to support our growth objective of 8% to 10% organic growth per year. For fiscal 2026, our year-to-date book-to-bill ratio is 1.6 times, well above this long-term goal, and I'm happy to report that our pipeline of opportunities remains full due to the tailwinds we are seeing in our markets. Turning to slide 14, we ended the quarter with $22.3 million in cash, and we had another strong operating cash flow quarter of $4.8 million. Additionally, during the quarter, we continued to invest in our capacity expansion initiatives that Matt outlined, including productivity improvements and enhancing our overall capabilities, as our capital expenditures totaled $2.8 million.
Chris Thome: Over the long term, we target a book-to-bill ratio of approximately 1.1 times to support our growth objective of 8% to 10% organic growth per year. For fiscal 2026, our year-to-date book-to-bill ratio is 1.6 times, well above this long-term goal, and I'm happy to report that our pipeline of opportunities remains full due to the tailwinds we are seeing in our markets. Turning to slide 14, we ended the quarter with $22.3 million in cash, and we had another strong operating cash flow quarter of $4.8 million. Additionally, during the quarter, we continued to invest in our capacity expansion initiatives that Matt outlined, including productivity improvements and enhancing our overall capabilities, as our capital expenditures totaled $2.8 million.
Speaker #2: For fiscal 2026, our year-to-date book-to-bill ratio is 1.6 times, well above this long-term goal. And I'm happy to report that our pipeline of opportunities remains full due to the tailwinds we are seeing in our markets.
Speaker #2: Turning to slide 14, we ended the quarter with $22.3 million in cash, and we had another strong operating cash flow quarter of $4.8 million.
Speaker #2: Additionally, during the quarter, we continued to invest in our capacity expansion initiatives that Matt outlined, including productivity improvements and enhancing our overall capabilities, as our capital expenditures totaled $2.8 million.
Speaker #2: Despite this continued investment, as well as our M&A activity, we still have ample liquidity to support our future growth initiatives as a result of our strong cash flow from operations and increased availability under our recently amended revolving credit facility.
Christopher Thome: Despite this continued investment, as well as our M&A activity, we still have ample liquidity to support our future growth initiatives as a result of our strong cash flow from operations and increased availability under our recently amended revolving credit facility, which was expanded to $80 million in January. As of today, only $20 million of debt is outstanding under this facility after the FlackTek acquisition. Under the terms of the FlackTek transaction, we acquired 100% of the equity of FlackTek for a base purchase price of $35 million, comprised of 85% cash and 15% equity, or 75,818 shares of Graham's common stock. The transaction also included the potential to earn up to an additional $25 million in future performance-based cash earnouts over four years, beginning in fiscal 2027, contingent upon achieving progressively higher Adjusted EBITDA performance targets.
Chris Thome: Despite this continued investment, as well as our M&A activity, we still have ample liquidity to support our future growth initiatives as a result of our strong cash flow from operations and increased availability under our recently amended revolving credit facility, which was expanded to $80 million in January. As of today, only $20 million of debt is outstanding under this facility after the FlackTek acquisition. Under the terms of the FlackTek transaction, we acquired 100% of the equity of FlackTek for a base purchase price of $35 million, comprised of 85% cash and 15% equity, or 75,818 shares of Graham's common stock. The transaction also included the potential to earn up to an additional $25 million in future performance-based cash earnouts over four years, beginning in fiscal 2027, contingent upon achieving progressively higher Adjusted EBITDA performance targets.
Speaker #2: Which was expanded to $80 million in January. As of today, only $20 million of debt is outstanding under this facility, after the Flaktek acquisition.
Speaker #2: Under the terms of the Flaktek transaction, we acquired 100% of the equity of Flaktek for a base purchase price of $35 million. The consideration was comprised of 85% cash and 15% equity, or 75,818 shares of Graham's common stock.
Speaker #2: The transaction also included the potential to earn up to an additional $25 million in future performance-based cash earnouts over four years, beginning in fiscal 2027.
Speaker #2: Contingent upon achieving progressively higher adjusted EBITDA performance targets. The base purchase price represents approximately 12 times Flaktek's projected adjusted EBITDA for 2026. The on-hand and borrowings under our revolving credit facility.
Christopher Thome: The base purchase price represents approximately 12 times FlackTek's projected adjusted EBITDA for 2026. The acquisition was funded through a combination of cash on hand and borrowings under our revolving credit facility. Turning to guidance on slide 15. Based on our performance through the first 9 months of fiscal 2026, our outlook for the remainder of the year, and inclusive of the FlackTek and XDot acquisitions, we are increasing our full-year fiscal 2026 guidance for net sales and adjusted EBITDA. We now expect revenue to be in the range of $233 million to $239 million, and adjusted EBITDA to be between $24 million and $28 million. At the midpoint of the ranges, this represents increases of 12% and 16% respectively.
Chris Thome: The base purchase price represents approximately 12 times FlackTek's projected adjusted EBITDA for 2026. The acquisition was funded through a combination of cash on hand and borrowings under our revolving credit facility. Turning to guidance on slide 15. Based on our performance through the first 9 months of fiscal 2026, our outlook for the remainder of the year, and inclusive of the FlackTek and XDot acquisitions, we are increasing our full-year fiscal 2026 guidance for net sales and adjusted EBITDA. We now expect revenue to be in the range of $233 million to $239 million, and adjusted EBITDA to be between $24 million and $28 million. At the midpoint of the ranges, this represents increases of 12% and 16% respectively.
Speaker #2: Turning to guidance on slide 15, based on our performance through the first nine months of fiscal 2026, our outlook for the remainder of the year, and inclusive of the Flaktek and XDOT acquisitions: we are increasing our full-year fiscal 2026 guidance for net sales and adjusted EBITDA.
Speaker #2: We now expect revenue to be in the range of $233,000 to $239,000, and adjusted EBITDA to be between $24,000 and $28,000. At the midpoint of the ranges, this represents increases of 12% and 16%, respectively.
Speaker #2: Overall, with robust demand across our core end markets, strong execution, and a record backlog, we remain confident in our ability to deliver continued performance and to achieve our long-term objectives of 8% to 10% organic revenue growth and low to mid-teen adjusted EBITDA margins by fiscal 2027.
Christopher Thome: Overall, with strong execution, robust demand across our core end markets, and a record backlog, we remain confident in our ability to deliver continued performance and to achieve our long-term objectives of 8 to 10% organic revenue growth and low to mid-teen Adjusted EBITDA margins by fiscal 2027. With that, we can now open the call for questions.
Chris Thome: Overall, with strong execution, robust demand across our core end markets, and a record backlog, we remain confident in our ability to deliver continued performance and to achieve our long-term objectives of 8 to 10% organic revenue growth and low to mid-teen Adjusted EBITDA margins by fiscal 2027. With that, we can now open the call for questions.
Speaker #2: With that, we can now open the call for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad.
Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Russell Stanley with Beacon Securities. Please proceed with your question.
Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Russell Stanley with Beacon Securities. Please proceed with your question.
Speaker #2: A confirmation tone will queue. You may press star two if you would like to remove your question to indicate your line is in the question queue.
Speaker #2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
Speaker #2: Thank you. Our first question comes from Securities. Please proceed with your question.
Russell Stanley: Good morning, and thank you for the questions, and congrats on the quarter. My first question, just around demand, specifically in defense. We saw both the major shipbuilders announce plans for significant CapEx increases for the coming year, which, obviously not terribly surprising. Just wondering if you're at all, surprised by the magnitude of the increases you're contemplating, and how you're thinking about allocating your CapEx spend going forward, given their plans for CapEx expansion. Any color there would be helpful. Thank you.
Speaker #3: Good morning, and thank you for the questions, and congrats on the quarter. My first question is just around demand, specifically in defense. We saw both the major shipbuilders announce plans for significant CapEx increases for the coming year. Were you at all surprised by the magnitude of that? Obviously, it's not terribly surprising.
Russell Stanley: Good morning, and thank you for the questions, and congrats on the quarter. My first question, just around demand, specifically in defense. We saw both the major shipbuilders announce plans for significant CapEx increases for the coming year, which, obviously not terribly surprising. Just wondering if you're at all, surprised by the magnitude of the increases you're contemplating, and how you're thinking about allocating your CapEx spend going forward, given their plans for CapEx expansion. Any color there would be helpful. Thank you.
Speaker #3: Increases, or contemplating—just wondering if and how you're thinking about allocating your CapEx spend going forward, given those plans for CapEx expansion. Any color there would be helpful.
Speaker #3: Thank
Speaker #3: you.
Speaker #4: Yeah, Rod, thanks for the
Christopher Thome: Yeah, Russ, thanks for the question. As you mentioned, the defense platform, specifically on the strategic undersea programs, remain healthy with a lot of demand. The fortunate thing for Graham is, you know, we've been making these investments for several years at this point, and, you know, we believe that we have opened up capacity through a through sort of efficiency improvements by the equipment we've already implemented. With that, based on, you know, the increasing backlog that we've continued to be able to secure, we are also looking at future investments as we move forward. Like we've done in the past, we look to balance that between our own internal investments, as well as offsetting that with what's potentially through the marine industrial base.
Matt Malone: Yeah, Russ, thanks for the question. As you mentioned, the defense platform, specifically on the strategic undersea programs, remain healthy with a lot of demand. The fortunate thing for Graham is, you know, we've been making these investments for several years at this point, and, you know, we believe that we have opened up capacity through a through sort of efficiency improvements by the equipment we've already implemented. With that, based on, you know, the increasing backlog that we've continued to be able to secure, we are also looking at future investments as we move forward. Like we've done in the past, we look to balance that between our own internal investments, as well as offsetting that with what's potentially through the marine industrial base.
Speaker #4: As you mentioned, the defense platform, specifically on these strategic undersea programs, remains healthy with a lot of demand. The fortunate thing for Graham is we've been making these investments for several years at this point, and capacity—we believe that we have opened up through sort of efficiency improvements by the equipment we've already implemented.
Speaker #4: With that, based on the increasing backlog that we've continued to be able to secure, we are also looking at future investments as we move forward.
Speaker #4: Like we've done in the past, we look to balance that between our own internal investments, as well as offsetting the marine industrial with what's potentially through base.
Christopher Thome: So, Russ, I think the simple answer to that is we'll look to continue to invest at that sort of 7 to 10% of revenue number that we've been over the years, and specifically continuing down the path we've been. We don't see sort of a demand that's unproportional to our past investment portfolio.
Speaker #4: So Russ, I think the simple answer to that is we'll look to continue to invest at that sort of 10% of revenue number that we've been at over the years, and specifically continuing down the path we've been of 7 to 10%.
Matt Malone: So, Russ, I think the simple answer to that is we'll look to continue to invest at that sort of 7 to 10% of revenue number that we've been over the years, and specifically continuing down the path we've been. We don't see sort of a demand that's unproportional to our past investment portfolio.
Speaker #4: We don't see a sort of demand that's unproportional to our past investment.
Speaker #3: That's great. Thanks for
Russell Stanley: That's great. Thanks for that. And then maybe moving on to the M&A strategy, FlackTek was your largest buy in some time, and that tends to wake up, I think, other potential sellers. I'm wondering, you've described FlackTek as adding a third platform. Wondering if there are other platforms, so to speak, out there for you to add, or should we think about additional M&A focusing on the existing three that you now have?
Russell Stanley: That's great. Thanks for that. And then maybe moving on to the M&A strategy, FlackTek was your largest buy in some time, and that tends to wake up, I think, other potential sellers. I'm wondering, you've described FlackTek as adding a third platform. Wondering if there are other platforms, so to speak, out there for you to add, or should we think about additional M&A focusing on the existing three that you now have?
Speaker #3: That, and that may be moving on to portfolio. The M&A strategy—Flaktek was your largest buy in some time, and that tends to wake up, I think, others. Flaktek as adding a third platform.
Speaker #3: Wondering if there are other platforms, so to potential sellers I'm wondering—like you've described—out there for you to add, or should we think about additional M&A focusing on the existing three that you now have?
Speaker #4: Yeah, great question. So, to the point I've been making about nurturing these relationships for quite some time—we've been doing this for years at this point. We're looking for folks that want to have skin in the game and really grow with us.
Christopher Thome: Yeah, great question. So to the point I've been making for quite some time, you know, we've been nurturing these relationships for, you know, years at this point. We're looking for folks that want to have skin in the game and really grow with us.
Matt Malone: Yeah, great question. So to the point I've been making for quite some time, you know, we've been nurturing these relationships for, you know, years at this point. We're looking for folks that want to have skin in the game and really grow with us.
Speaker #4: Flaktek does offer that third. We have a really strong first at Graham Manufacturing, which has been around for 90 years with vacuum and heat transfer.
Matthew Malone: ... FlackTek does offer that third. We have a really strong first at, at Graham Manufacturing, which has been, you know, around for 90 years with vacuum and heat transfer. We continue to have a tremendous amount of opportunity within that business to further grow organically. Within Barber-Nichols, you know, we've done some small tuck-in acquisitions, both technology as well as capability. FlackTek offers that third leg of the stool that's across all of the same end markets, as well as some additional opportunities for scale. I think as we move forward, what we'll focus more heavily on continuing to invest in these three platform focus areas. And then, you know, longer term, as we sort of move out of expansion within those three product platforms, you know, maybe there will be additional.
Matt Malone: ... FlackTek does offer that third. We have a really strong first at, at Graham Manufacturing, which has been, you know, around for 90 years with vacuum and heat transfer. We continue to have a tremendous amount of opportunity within that business to further grow organically. Within Barber-Nichols, you know, we've done some small tuck-in acquisitions, both technology as well as capability. FlackTek offers that third leg of the stool that's across all of the same end markets, as well as some additional opportunities for scale. I think as we move forward, what we'll focus more heavily on continuing to invest in these three platform focus areas. And then, you know, longer term, as we sort of move out of expansion within those three product platforms, you know, maybe there will be additional.
Speaker #4: We continue to have a tremendous amount of opportunity within that business to grow organically. Within Barber-Nichols, we've done some small tuck-in acquisitions—both technology as well as capability—to further grow.
Speaker #4: Flaktek offers that third leg of the stool that's across all of the same end markets, as well as some additional, with opportunity for scale.
Speaker #4: I think as we move forward, we'll focus more heavily on continuing to invest in these three platform focus areas. And then, longer-term, for expansion within those three product platforms, maybe there will be additional.
Speaker #4: And those additional platforms in the future could come on as a spin-out or through an acquisition from existing business units, or as a standalone.
Matthew Malone: Those additional platforms in the future could come, one, as a spin-out from existing business units or, you know, through an acquisition of a standalone platform.
Matt Malone: Those additional platforms in the future could come, one, as a spin-out from existing business units or, you know, through an acquisition of a standalone platform.
Speaker #4: platform. That's great.
Russell Stanley: That's great. Maybe I'll sneak in one last question, and I'll come back again to the Navy. Obviously, you're sole sourcing a lot of the work you do. I'm wondering, you know, how you're thinking about pursuing other work from the Navy, other programs. Obviously, it's easier to get in on the ground floor, but I'd love to hear whatever progress you can share on pursuing new work, not just the existing programs you have, but maybe, perhaps, other opportunities. Thanks.
Russell Stanley: That's great. Maybe I'll sneak in one last question, and I'll come back again to the Navy. Obviously, you're sole sourcing a lot of the work you do. I'm wondering, you know, how you're thinking about pursuing other work from the Navy, other programs. Obviously, it's easier to get in on the ground floor, but I'd love to hear whatever progress you can share on pursuing new work, not just the existing programs you have, but maybe, perhaps, other opportunities. Thanks.
Speaker #3: Maybe I'll sneak in one last question, and I'll come back again to the Navy. Obviously, you're a sole source on a lot of the work you do.
Speaker #3: I'm wondering how you're thinking about pursuing other work from the Navy, other programs. Obviously, it's easier to get in at the ground floor, but I'd love to hear whatever progress you can share—not just the existing share on pursuing new programs you have, but maybe perhaps other opportunities.
Matthew Malone: Yeah. Great question. We're continuing to find that the capability that we have put in the back pocket of the corporation is absolutely needed by end users. You know, precision fabrication, which tends to be welding and advanced, you know, precision, is a need that's been spoken about in the United States for quite some time. So we're seeing that applicability of those core competencies really, you know, move in a nice direction in pursuing new opportunities. So I'll just say adjacencies of using existing capability. If you look at the Barber-Nichols footprint, you know, high-speed rotating machines that allow for enhanced efficiency or smaller footprint, the world's moving to more power, higher compute speeds, and that requires smaller assets that can do more. So Russ, I think the sort of simple story is our core competencies are absolutely able to leverage on new opportunities.
Matt Malone: Yeah. Great question. We're continuing to find that the capability that we have put in the back pocket of the corporation is absolutely needed by end users. You know, precision fabrication, which tends to be welding and advanced, you know, precision, is a need that's been spoken about in the United States for quite some time. So we're seeing that applicability of those core competencies really, you know, move in a nice direction in pursuing new opportunities. So I'll just say adjacencies of using existing capability. If you look at the Barber-Nichols footprint, you know, high-speed rotating machines that allow for enhanced efficiency or smaller footprint, the world's moving to more power, higher compute speeds, and that requires smaller assets that can do more. So Russ, I think the sort of simple story is our core competencies are absolutely able to leverage on new opportunities.
Speaker #4: Precision—advanced precision—is a need that's been spoken about in the United States for quite some time. So we're seeing that applicability of those core competencies really move in a nice direction in pursuing new opportunities.
Speaker #4: So I'll just say, adjacencies of using existing capability—if you look at the Barber-Nichols footprint, high-speed rotating machines that allow for enhanced efficiency and a smaller footprint.
Speaker #4: The world's moving to more power, higher compute speeds, and that requires smaller assets that can do more. So, Russ, I think the sort of simple story is our core competencies are absolutely able to leverage new opportunities.
Speaker #4: What we're doing is we're really bolstering our commercialization strategy of technology so that we can go to our customers and offer the value to them in addition to our typical inbound strategy.
Matthew Malone: What we're doing is we're really bolstering our commercialization strategy of technology so that we can, you know, go to our customers and offer the value to them in addition to our typical inbound strategy. So we're taking more of an outbound, let's go tell them how our technology and capability can differentiate and provide them value.
Matt Malone: What we're doing is we're really bolstering our commercialization strategy of technology so that we can, you know, go to our customers and offer the value to them in addition to our typical inbound strategy. So we're taking more of an outbound, let's go tell them how our technology and capability can differentiate and provide them value.
Speaker #4: So we're taking more of an outbound approach—let's go tell them how our technology and capability can differentiate and provide them.
Speaker #3: That's great. Thanks for the color. Congrats.
Russell Stanley: That's great. Thanks for the color. Congrats again. I'll get back in the queue.
Russell Stanley: That's great. Thanks for the color. Congrats again. I'll get back in the queue.
Speaker #3: Again, I'll get back in the queue. Value.
Speaker #5: Our next question comes from the line of Bobby Brooks with Northland Capital Markets. Please proceed with your question.
Operator: Our next question comes from the line of Bobby Brooks with Northland Capital Markets. Please proceed with your question.
Operator: Our next question comes from the line of Bobby Brooks with Northland Capital Markets. Please proceed with your question.
Speaker #6: Hey, good morning, guys. Thank you for taking my question. The first one was just on—you guys say callback growth in existing programs within defense.
Bobby Brooks: Hey, good morning, guys. Thank you for taking my question. First one was just on, you guys had called out growth in existing programs within defense, and I was just curious how that actually looks in reality. Like, are you actively winning more wallet share on current projects, and if so, how? I guess I was just under the-- I had the understanding that these projects are pretty set in stone when the contracts were awarded.
Bobby Brooks: Hey, good morning, guys. Thank you for taking my question. First one was just on, you guys had called out growth in existing programs within defense, and I was just curious how that actually looks in reality. Like, are you actively winning more wallet share on current projects, and if so, how? I guess I was just under the-- I had the understanding that these projects are pretty set in stone when the contracts were awarded.
Speaker #6: And I was, in reality. Are you actively winning more wallet share on current projects? And if so, how? I guess I was just under the— I had the understanding that these projects are pretty— just curious how that actually looks and set in stone when the contracts were awarded.
Matthew Malone: Yeah. Yeah, great question. So the first part is, it's both, as always, with us. We're continuing to see additional scope that's coming from our core capability and programs that we've been on. Examples of that, you know, we're seeing additional solicitations for spare assets and others that we originally did not have in the lens. On the other side of that, you know, we're successfully meeting our customers' end requirements, and that's both in time, speed, quality, you know, everything. And so what's happening as a result of that, Bobby, is, yes, we are seeing additional opportunities that are additive to our current scope of supply. And that could be everything from undersea submarine platforms to, you know, laser and cooling, or laser and radar cooling platforms for directed energy.
Matt Malone: Yeah. Yeah, great question. So the first part is, it's both, as always, with us. We're continuing to see additional scope that's coming from our core capability and programs that we've been on. Examples of that, you know, we're seeing additional solicitations for spare assets and others that we originally did not have in the lens. On the other side of that, you know, we're successfully meeting our customers' end requirements, and that's both in time, speed, quality, you know, everything. And so what's happening as a result of that, Bobby, is, yes, we are seeing additional opportunities that are additive to our current scope of supply. And that could be everything from undersea submarine platforms to, you know, laser and cooling, or laser and radar cooling platforms for directed energy.
Speaker #4: Yeah, great question. So the first part is it's both, as always, with us. We're continuing to see additional activity in our core capability and the programs that we've been on.
Speaker #4: Examples of that were we're seeing additional solicitations for spare assets and others that we originally did not have in the lens. On the other side of that, we're successfully meeting our customers' end requirements.
Speaker #4: And that's both in time, speed, quality, everything. And so what's happening as a result of that, Bobby, is yes, we are seeing additional opportunities that are additive to our current scope of supply.
Speaker #4: And that could be everything to laser, and from undersea submarine platforms, cooling, or laser and radar for directed energy. So it's a combination of cooling platforms, both.
Matthew Malone: So, it's a combination of both.
Matt Malone: So, it's a combination of both.
Speaker #6: Got it. That's helpful. And then, Chris, I know you had mentioned historically, you guys have talked about targeting a 1.1 book-to-bill, and that was kind of reaffirmed earlier in the call.
Bobby Brooks: Got it. That's helpful. And then, Chris, I know you had mentioned, like, or historically, you guys have talked about targeting 1.1 book-to-bill, and that was kind of reaffirmed earlier in the call. But after another outstanding quarter of orders, I'd assume that at the minimum, that outlook has changed for this year, since you've already done $280 million in orders, which would be a 1.17 book-to-bill for the full year, assuming the high end of your revenue guidance and zero orders in Q4. So I was just curious to get your sense on... And, and you also mentioned the pipeline remains full.
Bobby Brooks: Got it. That's helpful. And then, Chris, I know you had mentioned, like, or historically, you guys have talked about targeting 1.1 book-to-bill, and that was kind of reaffirmed earlier in the call. But after another outstanding quarter of orders, I'd assume that at the minimum, that outlook has changed for this year, since you've already done $280 million in orders, which would be a 1.17 book-to-bill for the full year, assuming the high end of your revenue guidance and zero orders in Q4. So I was just curious to get your sense on... And, and you also mentioned the pipeline remains full.
Speaker #6: But after another outstanding quarter of orders, I'd assume that at a minimum, that outlook has changed for this year since you've already done $280 million in orders, which would be a 1.17 book-to-bill for your revenue guidance and zero orders in the fourth quarter.
Speaker #6: So I was just curious to get your sense on, and you also mentioned the pipeline remains full. So I was just curious on the thinking of how landing at 1.1 book-to-bill long term is still the right way to look at it.
Bobby Brooks: I was just curious on the thinking of how landing at 1.1 book-to-bill long term is still the right way to look at it, and any color you could give maybe on how far key orders have progressed.
Bobby Brooks: I was just curious on the thinking of how landing at 1.1 book-to-bill long term is still the right way to look at it, and any color you could give maybe on how far key orders have progressed.
Speaker #6: And any color you could give maybe on how for Q order, orders have—
Speaker #6: progressed. Yeah,
Christopher Thome: Yeah, Bobby, that's a great question. You know, the main reason for putting out the 1.1 book-to-bill, long-term guidance is because, you know, when we took a look back at the last five to 10 years, that was our, you know, that was our book-to-bill ratio. As you know, you know, our book-to-bill ratio can be very lumpy, you know, ranging anywhere on a, you know, from 0.5 times to 2.4 times in any given quarter.
Chris Thome: Yeah, Bobby, that's a great question. You know, the main reason for putting out the 1.1 book-to-bill, long-term guidance is because, you know, when we took a look back at the last five to 10 years, that was our, you know, that was our book-to-bill ratio. As you know, you know, our book-to-bill ratio can be very lumpy, you know, ranging anywhere on a, you know, from 0.5 times to 2.4 times in any given quarter.
Speaker #4: Bobby. That's a great question. The main reason for putting out the 1.1 book to bill long-term guidance is because when we took a look back at the last 5 to 10 years, that was our that was our book to bill ratio.
Speaker #4: As you know, our book-to-bill ratio can be very lumpy, ranging anywhere from 0.5 times to 2.4 times in any given quarter.
Speaker #4: But over the long term, we expect it, and we want it to be 1.1. So that 1.1 wasn't meant to be guidance. With the year-to-date book-to-bill ratio of 1.6, we expect to be for fiscal over that 1.1 long-term target for the year.
Matthew Malone: ... but over the long term, we expect it and we want it to be 1.1. So that 1.1 wasn't meant to be guidance for fiscal 2026. As you pointed out, obviously, with the year-to-date book-to-bill ratio of 1.6, we expect to be over that 1.1, long-term target for the year. But again, over the long term, we want it to be 1.1 to support our 8% to 10% organic growth.
Chris Thome: ... but over the long term, we expect it and we want it to be 1.1. So that 1.1 wasn't meant to be guidance for fiscal 2026. As you pointed out, obviously, with the year-to-date book-to-bill ratio of 1.6, we expect to be over that 1.1, long-term target for the year. But again, over the long term, we want it to be 1.1 to support our 8% to 10% organic growth.
Speaker #4: But again, over the long term, we want it to be 1.1 to support our 8 to 10 percent organic.
Speaker #4: growth. Yeah, that's
Bobby Brooks: Yeah, that's helpful. I'll, I'll return to the queue. Thank you, guys, and congrats on the strong quarter.
Bobby Brooks: Yeah, that's helpful. I'll, I'll return to the queue. Thank you, guys, and congrats on the strong quarter.
Speaker #6: Helpful. I'll return to the queue. Thank you, guys, and congrats on the strong—
Speaker #4: Thanks,
Matthew Malone: Thanks, Bobby.
Bobby Brooks: Thanks, Bobby.
Speaker #4: Bobby, our next question comes from a line.
Operator: Our next question comes from the line of Tony Bancroft with Gabelli Funds. Please proceed with your question.
Operator: Our next question comes from the line of Tony Bancroft with Gabelli Funds. Please proceed with your question.
Speaker #5: Tony Bancroft with Qaveli Funds. Please proceed with your question.
Speaker #5: question. Good morning, gentlemen and
Tony Bancroft: Good morning, gentlemen, and, congratulations on the great numbers. Very well done. You know, you were talking earlier about, what would be potential, I know you're working on these 3 strategies right now, core, the core pillars, and you're going to be building up those. But, you know, I guess I wasn't, I wasn't thinking about a company like FlackTek, for you guys. Could maybe, you know, Matt, could you give me, like, a 30-second hip pocket lecture on what, where are these, addressable markets that you or these adjacencies, and then sort of what's the scope of these adjacencies that you would, you know, Graham, 5 or 10 years from now, 5 years from now, would want to be, would want to be in?
Tony Bancroft: Good morning, gentlemen, and, congratulations on the great numbers. Very well done. You know, you were talking earlier about, what would be potential, I know you're working on these 3 strategies right now, core, the core pillars, and you're going to be building up those. But, you know, I guess I wasn't, I wasn't thinking about a company like FlackTek, for you guys. Could maybe, you know, Matt, could you give me, like, a 30-second hip pocket lecture on what, where are these, addressable markets that you or these adjacencies, and then sort of what's the scope of these adjacencies that you would, you know, Graham, 5 or 10 years from now, 5 years from now, would want to be, would want to be in?
Speaker #7: Congratulations on the great numbers. Very well done. You were talking earlier about what would be potential. I know you're working on these three strategies right now, the core pillars.
Speaker #7: You're going to be building up those. But I guess I wasn't thinking about a company like Slack Tech for you guys. Could maybe Matt, could you give me a 30-second hip pocket lecture on what where are these addressable markets that you or these adjacencies and sort of what's the scope of these adjacencies that you would Graham 5 or 10 years from now, 5 years from now, would want to be would want to be in?
Speaker #7: Maybe you could just sort of encapsulate, talk about—
Tony Bancroft: Maybe you could just sort of encapsulate or, you know, talk about that.
Tony Bancroft: Maybe you could just sort of encapsulate or, you know, talk about that.
Speaker #4: Yeah, that. The first thing that folks don't necessarily hone in on is advanced mixing, specifically dual asymmetric mixing. It's the exact marry of turbomachinery and vacuum and heat transfer.
Matthew Malone: Yeah. Yeah, so the first thing that folks don't necessarily hone in on is advanced mixing, specifically dual asymmetric mixing, is the exact marry of turbomachinery and vacuum and heat transfer. It literally is the blend of those two core physics-based technologies. So mixing in itself is a really nice platform that couples with our engineering know-how. The next item, Tony, that I'd offer, and this is more broadly, is we love the market agnostic, really differentiated, moated technology. So in FlackTek, I'll use it as an example, you've got, you know, 5 product SKUs that range everywhere from lab scale to, you know, large production scale, and these really can offer a disruptive moat as we move forward.
Matt Malone: Yeah. Yeah, so the first thing that folks don't necessarily hone in on is advanced mixing, specifically dual asymmetric mixing, is the exact marry of turbomachinery and vacuum and heat transfer. It literally is the blend of those two core physics-based technologies. So mixing in itself is a really nice platform that couples with our engineering know-how. The next item, Tony, that I'd offer, and this is more broadly, is we love the market agnostic, really differentiated, moated technology. So in FlackTek, I'll use it as an example, you've got, you know, 5 product SKUs that range everywhere from lab scale to, you know, large production scale, and these really can offer a disruptive moat as we move forward.
Speaker #4: It literally is the blend of those two core physics-based technologies. So, mixing in itself is a really nice platform that couples with our engineering know-how.
Speaker #4: The next item, Tony, that it offers—and this is more broadly—is we love the market-agnostic, really differentiated, moated technology. So in Slack Tech, I'll use it as an example.
Speaker #4: You've got five product SKUs that range everywhere from lab scale to large production scale. And these really can offer a disruptive moat as we move forward.
Speaker #4: And so what we're seeing there is they play in R3N markets extremely favorably. But they also have a portfolio that expands beyond that for continued growth in medical, in personal care, in battery technology, etc., the list goes on.
Matthew Malone: And so what we're seeing there is they play in our three end markets extremely favorably, but they also have a portfolio that expands beyond that for continued growth in medical, in personal care, you know, in battery technology, et cetera. The list goes on. The last one that I'd offer you is this. You got to look forward in terms of where technology's moving. We're really, you know, we're talking about electrification of our turbo machinery. We're talking about advanced and intelligent control of our turbo machinery. We're talking about using technology like computational fluid dynamics in our new designs in the industrial business. Really, it's bringing a technology footprint to see where the markets are going.
Matt Malone: And so what we're seeing there is they play in our three end markets extremely favorably, but they also have a portfolio that expands beyond that for continued growth in medical, in personal care, you know, in battery technology, et cetera. The list goes on. The last one that I'd offer you is this. You got to look forward in terms of where technology's moving. We're really, you know, we're talking about electrification of our turbo machinery. We're talking about advanced and intelligent control of our turbo machinery. We're talking about using technology like computational fluid dynamics in our new designs in the industrial business. Really, it's bringing a technology footprint to see where the markets are going.
Speaker #4: The last one that I'd offer you is this: you’ve got to look forward in terms of where technology is moving. Really, we're talking about the electrification of our turbomachinery.
Speaker #4: We're talking about advanced and intelligent control of our turbomachinery. We're talking about using technology like computational fluid dynamics in our new designs in the industrial business.
Speaker #4: Really, it's bringing a technology footprint to see where the markets are going. And in this case, the biggest competitor for Slack Tech is a bucket and a stick, which is you're mixing this stuff by hand.
Matthew Malone: And in this case, you know, the biggest competitor for FlackTek is a bucket and a stick, which is you're mixing this stuff by hand. And so as we move to a place of automation, efficiency, et cetera, where throughputs are increasing, it's a natural replacement for more advanced technology. So it's not one simple answer, but the core of it is engineered, differentiated, technology-driven solutions that have an agnostic market footprint.
Matt Malone: And in this case, you know, the biggest competitor for FlackTek is a bucket and a stick, which is you're mixing this stuff by hand. And so as we move to a place of automation, efficiency, et cetera, where throughputs are increasing, it's a natural replacement for more advanced technology. So it's not one simple answer, but the core of it is engineered, differentiated, technology-driven solutions that have an agnostic market footprint.
Speaker #4: Automation, efficiency, etc.—where throughputs are increasing—it's a natural replacement for more advanced technology. So it's not one simple 'and' answer. But the core of it is engineered, differentiated, technology-driven solutions that have an agnostic market footprint.
Speaker #7: Perfect. Thanks so much. Great job.
Tony Bancroft: Perfect. Thanks so much. Great job.
Tony Bancroft: Perfect. Thanks so much. Great job.
Speaker #5: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Gary Schwab with Valley Forge Capital Management.
Operator: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Gary Schwab with Valley Forge Capital Management. Please proceed with your question.
Operator: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Gary Schwab with Valley Forge Capital Management. Please proceed with your question.
Speaker #5: Please proceed with your
Speaker #8: Hi, guys.
Gary Schwab: Hi, guys. You, boy, you're juggling a lot of balls at the same time, and you're handling everything really well. Great job. My question is about FlackTek. You mentioned that they're involved in solid rocket motor mixing. Are there any restrictions from the FlackTek partnership by Anduril against selling Mega to the two major solid rocket motor competitors?
Gary Schwab: Hi, guys. You, boy, you're juggling a lot of balls at the same time, and you're handling everything really well. Great job. My question is about FlackTek. You mentioned that they're involved in solid rocket motor mixing. Are there any restrictions from the FlackTek partnership by Anduril against selling Mega to the two major solid rocket motor competitors?
Speaker #8: Boy, you're juggling a lot of balls at the same time, and you're handling every question really well. Great job. My question is about Slack Tech.
Speaker #8: You mentioned that they're involved in solid rocket motor mixing. Are there any restrictions from the Slack Tech partnership by Anduril against selling Mega to the two major solid rocket motor manufacturers?
Speaker #8: Competitors? So, Gary, yeah, obviously, there—
Matthew Malone: So Gary, yeah, obviously there was a large publication, you know, working between Anduril and FlackTek. And what I'll say is, you know, it was developed by FlackTek for an end use at Anduril. You know, we do absolutely view Anduril as a key end user of the technology, and we'll continue to ensure that they're successful in their endeavors. You know, this is revolutionizing the mixing process for solid rocket motors, which will push the entire industry forward. What we're seeing more broadly is, you know, once you have one big win in a given area, like energetics, you see a lot of folks start to, you know, come to the surface.
Matt Malone: So Gary, yeah, obviously there was a large publication, you know, working between Anduril and FlackTek. And what I'll say is, you know, it was developed by FlackTek for an end use at Anduril. You know, we do absolutely view Anduril as a key end user of the technology, and we'll continue to ensure that they're successful in their endeavors. You know, this is revolutionizing the mixing process for solid rocket motors, which will push the entire industry forward. What we're seeing more broadly is, you know, once you have one big win in a given area, like energetics, you see a lot of folks start to, you know, come to the surface.
Speaker #4: There was a large publication working between Anduril and Slack Tech, and what I'll say is, it was developed by Slack Tech for end use at Anduril.
Speaker #4: We do absolutely view Anduril as a key end user of the technology, and we'll continue to ensure that they're successful in their endeavors. This is revolutionizing the mixing process for solid rocket motors, which will push the entire industry forward.
Speaker #4: What we're seeing more broadly is, once you have one big win in a given area, like energetics, you see a lot of folks start to come to the surface.
Speaker #4: And the short of it is, we have no restriction in the relationship on providing dual asymmetric mixing machines to others, with the exception of specifically the Mega product line, pending some level of purchase of equipment.
Matthew Malone: And the short of it is, we have, you know, no restriction in the relationship on providing dual asymmetric mixing machines to others, with the exception of specifically the medical-Mega product line, you know, pending some level of purchase of equipment. So we'll respect that relationship. And what we're seeing is the large machine, the medium machines, the other footprint machines are more than adequate to supply the majority of other providers in this space, which is not prevented. So, as a result of the Anduril partnership, we're seeing a lot of other opportunities that have brought the technology to the forefront. But yeah, we'll continue to leverage this across energetics outside of the Mega.
Matt Malone: And the short of it is, we have, you know, no restriction in the relationship on providing dual asymmetric mixing machines to others, with the exception of specifically the medical-Mega product line, you know, pending some level of purchase of equipment. So we'll respect that relationship. And what we're seeing is the large machine, the medium machines, the other footprint machines are more than adequate to supply the majority of other providers in this space, which is not prevented. So, as a result of the Anduril partnership, we're seeing a lot of other opportunities that have brought the technology to the forefront. But yeah, we'll continue to leverage this across energetics outside of the Mega.
Speaker #4: So, we'll respect that relationship. And what we're seeing is the large machine, the medium machines, the other footprint machines are other providers in this space, which is more than adequate to supply the majority of—not prevented.
Speaker #4: So, as a result of the Anduril partnership, we're seeing a lot of other opportunities that have brought the technology to the forefront. But yeah, we'll continue to leverage this across energetics outside of the
Speaker #4: Mega. Is the expectation for Mega to
Gary Schwab: ... And do you expect the MEGA to be your leading product for FlackTek? And have you come up with an available market size for MEGA?
Gary Schwab: ... And do you expect the MEGA to be your leading product for FlackTek? And have you come up with an available market size for MEGA?
Speaker #8: Be your leading product for Slack Tech? And have you come up with an available market size for—
Speaker #8: Mega? So we're
Matthew Malone: So we're quantifying that today. The answer is, as we move forward, you know, our focus is going to be on production footprint machines, I'll say. But FlackTek's been in business for over 20 years, providing this critical equipment to everything from laboratories to production environments. So I will say there will be a shift in focus to production-level machines, of course, MEGA being a portion of that. And the short of it is, I can't speak to the exact TAM on the call today. What I can say is, we see applicability from mixing food to energetics to, you know, upstream, the original constituents that go into epoxies, et cetera. So it's really market agnostic. We see sort of an unlimited footprint where this could impact.
Matt Malone: So we're quantifying that today. The answer is, as we move forward, you know, our focus is going to be on production footprint machines, I'll say. But FlackTek's been in business for over 20 years, providing this critical equipment to everything from laboratories to production environments. So I will say there will be a shift in focus to production-level machines, of course, MEGA being a portion of that. And the short of it is, I can't speak to the exact TAM on the call today. What I can say is, we see applicability from mixing food to energetics to, you know, upstream, the original constituents that go into epoxies, et cetera. So it's really market agnostic. We see sort of an unlimited footprint where this could impact.
Speaker #4: Quantifying that today, the answer is, as we move forward, our focus is going to be on production footprint machines, I'll say. But Slack Tech's been in business for over 20 years, providing this critical equipment to everything from laboratories to production environments.
Speaker #4: So I will say there will be a shift in focus to production-level machines—of course, Mega being a portion of that. And the short of it is I can't speak to the exact TAM on the call today.
Speaker #4: What I can say is we see applicability from mixing food to energetics, to upstream, the original constituents that go into epoxies, etc. So it's really market agnostic.
Speaker #4: We see sort of an unlimited impact.
Speaker #4: footprint where this could
Speaker #8: Okay, great. And if I could just ask—
Gary Schwab: Okay, great. If I could just ask one last quick one. The $30 million 2026 estimate for FlackTek, that's based on your year-end, ending next month. Is that correct?
Gary Schwab: Okay, great. If I could just ask one last quick one. The $30 million 2026 estimate for FlackTek, that's based on your year-end, ending next month. Is that correct?
Speaker #8: One last quick one. The $30 million 2026 estimate for Slack Tech—that's based on your year-end ending next month. Is that correct?
Christopher Thome: That's, that's the calendar year-end for 2026. So that's the current run rate for calendar year 2026.
Chris Thome: That's, that's the calendar year-end for 2026. So that's the current run rate for calendar year 2026.
Speaker #4: That's the calendar year-end for '26. So that's the current run rate—'26.
Speaker #4: For calendar year
Speaker #8: Okay, great. Thanks, Chris.
Gary Schwab: Okay, great. Thanks, Chris.
Gary Schwab: Okay, great. Thanks, Chris.
Christopher Thome: Sure.
Chris Thome: Sure.
Speaker #7: Thanks, Sure.
Matthew Malone: Thanks, Gary.
Matt Malone: Thanks, Gary.
Operator: Our next question is a follow-up from Bobby Brooks with Northland Capital Markets. Please proceed with your question.
Operator: Our next question is a follow-up from Bobby Brooks with Northland Capital Markets. Please proceed with your question.
Speaker #5: Our next question, Gary, is a follow-up from Bobby Brooks with Northland Capital. Please proceed with your question.
Speaker #5: question. Hey,
Bobby Brooks: Hey, so on the material receipts, so that was a drag on the, on gross margin this quarter and as well as last. And what I was hoping to get a better sense on was sort of the visibility of that going forward. Obviously, you're always gonna have material receipts, right? But do you have a good sense of when those will be highest, a few months out, or maybe asked differently, how far in advance do you know when that type of work is gonna flow through revenue?
Bobby Brooks: Hey, so on the material receipts, so that was a drag on the, on gross margin this quarter and as well as last. And what I was hoping to get a better sense on was sort of the visibility of that going forward. Obviously, you're always gonna have material receipts, right? But do you have a good sense of when those will be highest, a few months out, or maybe asked differently, how far in advance do you know when that type of work is gonna flow through revenue?
Speaker #6: so on the material receipts, so that was a drag on gross margin this quarter. And as well as last. And what I was hoping to get a better sense on was sort of the visibility of that going forward.
Speaker #6: Obviously, you're always going to have material receipts, right? But do you have a good sense of when those will be highest—a few months out? Or, maybe asked differently, how far in advance do you know when that type of work is going to flow through revenue?
Speaker #4: Yeah, so the material receipts are very lumpy in nature. They heavily impacted our Q2 results. They were still higher than normal in Q3. So, for Q4 and then going forward, we would expect them to be at a more normalized level.
Christopher Thome: Yeah. So the material receipts are very lumpy in nature. They heavily impacted our Q2 results. They were still higher than normal in Q3. So for Q4 and then going forward, we would expect them to be at a more normalized level. However, again, those material receipts can be lumpy in nature in any given quarter. So we have visibility out for about the next year on that.
Chris Thome: Yeah. So the material receipts are very lumpy in nature. They heavily impacted our Q2 results. They were still higher than normal in Q3. So for Q4 and then going forward, we would expect them to be at a more normalized level. However, again, those material receipts can be lumpy in nature in any given quarter. So we have visibility out for about the next year on that.
Speaker #4: However, again, those material receipts can be lumpy in nature in any given quarter. So, we have visibility out for about the next year on that.
Speaker #6: Got it. And maybe just so, is it essentially just ordering raw materials in anticipation of future work? Am I understanding, is that kind of the reason for it?
Bobby Brooks: Got it. And maybe just so, is it essentially just ordering raw materials in anticipation of future work? And, am I understanding, is that kind of the reason for it? Am I understanding that right?
Bobby Brooks: Got it. And maybe just so, is it essentially just ordering raw materials in anticipation of future work? And, am I understanding, is that kind of the reason for it? Am I understanding that right?
Speaker #6: Am I understanding that
Speaker #6: right? It's not in
Christopher Thome: It's not in anticipation of future work. We only place the material orders when we receive the order from our customer. So therefore, it's basically material receipts to support orders that are already in our backlog.
Chris Thome: It's not in anticipation of future work. We only place the material orders when we receive the order from our customer. So therefore, it's basically material receipts to support orders that are already in our backlog.
Speaker #4: Anticipation of future work—we only placed the material orders when we received the order from our customer. So, therefore, it's basically material receipts to support orders that are already in our backlog.
Speaker #6: Got it. And then, Matt, I really appreciate the one slide kind of going through some of the significant investments and facility enhancements done this year.
Bobby Brooks: Got it. And then, Matt, you did a—I really appreciate the one slide kind of going through some of the significant investments and facility enhancements done this year, but I know that you guys did some. Those were kind of focused on improvements made earlier in the quarter. And so I was just curious on anything to call out specifically that happened within the third quarter.
Bobby Brooks: Got it. And then, Matt, you did a—I really appreciate the one slide kind of going through some of the significant investments and facility enhancements done this year, but I know that you guys did some. Those were kind of focused on improvements made earlier in the quarter. And so I was just curious on anything to call out specifically that happened within the third quarter.
Speaker #6: But I know that you guys did some—those were kind of focused on improvements made early in the quarter. And so I was just curious if there's anything to call out specifically that happened within the third quarter?
Speaker #4: Yeah, a lot. You could see from that list, yes, we delivered the first assets from the liquid nitrogen test facility in Arvada. In the third quarter, we have brought online, as mentioned, the assembly and test facility, which is now shipping product, as well as the testing area in that facility.
Matthew Malone: Yeah. A lot. You know, you could see from that list, yes, we delivered the first assets from the liquid nitrogen test facility in Arvada, in Q3. We have brought online, as mentioned, the assembly and test facility, which is now shipping product, as well as the testing area in that facility. So across that entire platform, Bobby, you know, we're seeing real-time impact in Q3 from those assets coming online.
Matt Malone: Yeah. A lot. You know, you could see from that list, yes, we delivered the first assets from the liquid nitrogen test facility in Arvada, in Q3. We have brought online, as mentioned, the assembly and test facility, which is now shipping product, as well as the testing area in that facility. So across that entire platform, Bobby, you know, we're seeing real-time impact in Q3 from those assets coming online.
Speaker #4: So across that entire platform, Bobby, we're seeing real-time impact in the third quarter from those assets coming online.
Speaker #6: Got it. And then just
Bobby Brooks: Got it. And then just lastly for me-
Bobby Brooks: Got it. And then just lastly for me-
Speaker #6: last. The only exception to that,
Matthew Malone: The only exception to that, just for clarity, is the propellant test facility down in Florida. You know, we just did the ribbon cutting, but in the third quarter, that has not started to impact the business.
Matt Malone: The only exception to that, just for clarity, is the propellant test facility down in Florida. You know, we just did the ribbon cutting, but in the third quarter, that has not started to impact the business.
Speaker #4: The only exception to that, just for clarity, is the propellant test facility down in Florida. We just did the ribbon cutting, but in the third quarter, that has not started to impact the—
Speaker #4: business. Got it.
Bobby Brooks: Got it.
Bobby Brooks: Got it.
Christopher Thome: You know-
Chris Thome: You know-
Speaker #6: Thank you for
Bobby Brooks: Thank you for that.
Bobby Brooks: Thank you for that.
Speaker #6: Hey, Bobby, with regards to those capital
Christopher Thome: Bobby, with regards to those capital investments, though, right? As we said, they're not gonna have a material impact on our fiscal 2026 results. These investments are what's gonna help us get to our fiscal 2027 guidance and goals that we put out there, but it's gonna be a gradual increase in performance, right? You're not gonna see a step change overnight. So it's just, these are the investments that we're making to achieve the slow and steady growth that we're looking for and to achieve our fiscal 2027 targets. But it's not gonna be a step change.
Chris Thome: Bobby, with regards to those capital investments, though, right? As we said, they're not gonna have a material impact on our fiscal 2026 results. These investments are what's gonna help us get to our fiscal 2027 guidance and goals that we put out there, but it's gonna be a gradual increase in performance, right? You're not gonna see a step change overnight. So it's just, these are the investments that we're making to achieve the slow and steady growth that we're looking for and to achieve our fiscal 2027 targets. But it's not gonna be a step change.
Speaker #4: Investments, though, right, as we said, they're not going to have a material impact on our fiscal 2026 results. These investments are what's going to help us get to our fiscal 2027 guidance and goals that we put out there.
Speaker #4: But it's going to be a gradual increase in performance, right? You're not going to see a step change overnight. So, it's just these are the investments that we're making to achieve the slow and steady growth that we're looking for to reach our 2027 targets.
Speaker #4: But it's not going to be for, and to achieve, our fiscal step.
Speaker #4: change. Thank you.
Bobby Brooks: Thank you. That's, that's very helpful, color there. Then last question for me is just on the testing facilities in Jupiter, as well as Jupiter, Florida, as well as Colorado. Was curious to just maybe hear how the activity has gone thus far with booking up future slots for testing. And just also curious on, are those folks who are taking the booking testing slots, are those more so customers you're already working with? Or have you started to see a steady stream of folks that you don't have commercial relationships with yet?
Bobby Brooks: Thank you. That's, that's very helpful, color there. Then last question for me is just on the testing facilities in Jupiter, as well as Jupiter, Florida, as well as Colorado. Was curious to just maybe hear how the activity has gone thus far with booking up future slots for testing. And just also curious on, are those folks who are taking the booking testing slots, are those more so customers you're already working with? Or have you started to see a steady stream of folks that you don't have commercial relationships with yet?
Speaker #6: That's very helpful color there. Then, last question for me is just on the testing facilities in Jupiter, as well as Colorado—Jupiter, Florida, as well as Colorado. I was curious to just maybe hear how the activity has gone thus far with booking up future slots for testing, and just also curious on—have you seen, are those folks who are taking the booking testing slots more so customers you're already working with, or have you started to see a steady stream of folks that you don't have commercial relationships with?
Speaker #6: yet? Yeah.
Matthew Malone: ... Yeah, I'll break it down into two. Good question. In the Arvada facility, which is where the liquid nitrogen is, it is dedicated to a given production program today, and what I'll say is it's essentially booked for that program. As a result of execution, we continue to see, you know, further pipeline opportunities to continue that forward. Can we use it for other programs? The answer is absolutely yes, and we will, but today it's focused on one. So I would just call that pipeline healthy. On the cryogenic facility side, look, most important for us is safety on that facility and, and sort of, you know, with the commissioning process. So today we're having, you know, a number of conversations with potential end users, most of which are customers today.
Matt Malone: ... Yeah, I'll break it down into two. Good question. In the Arvada facility, which is where the liquid nitrogen is, it is dedicated to a given production program today, and what I'll say is it's essentially booked for that program. As a result of execution, we continue to see, you know, further pipeline opportunities to continue that forward. Can we use it for other programs? The answer is absolutely yes, and we will, but today it's focused on one. So I would just call that pipeline healthy. On the cryogenic facility side, look, most important for us is safety on that facility and, and sort of, you know, with the commissioning process. So today we're having, you know, a number of conversations with potential end users, most of which are customers today.
Speaker #4: I'll break it down into two. Good question. In the Arvada facility, which is where the liquid nitrogen is, it is dedicated to a given production program today.
Speaker #4: And what I'll say is, it's essentially booked for that program. As a result of execution, we continue to see further pipeline opportunities to continue that forward.
Speaker #4: Can we use it for other programs? The answer is absolutely yes, and we will. But today it's focused on one. So I would just call that pipeline healthy.
Speaker #4: On the cryogenic facility side, look, most important for us is safety on that facility. And sort of with the commissioning process—so today we're having a number of conversations with potential end users, most of which are customers today.
Speaker #4: We are focusing on the commissioning around the product that is already in our backlog. And so, we're prioritizing that not for a testing as a service today, but rather testing the product that we're shipping to our end customer contractually.
Matthew Malone: We are focusing on the commissioning around the product that is already in our backlog, and so we're prioritizing that not for a testing as a service today, but rather testing the product that we're shipping to our end customer contractually. So we'll ramp through testing our own products in the near term, but in short, Bobby, yes, the pipeline remains very active.
Matt Malone: We are focusing on the commissioning around the product that is already in our backlog, and so we're prioritizing that not for a testing as a service today, but rather testing the product that we're shipping to our end customer contractually. So we'll ramp through testing our own products in the near term, but in short, Bobby, yes, the pipeline remains very active.
Speaker #4: So, we'll ramp through testing our own products in the near term. But in short, Bobby, yes, the pipeline remains very strong.
Speaker #4: active. That's great to hear.
Bobby Brooks: That's great to hear. Thank you, guys, for the color. I'll return to the queue.
Bobby Brooks: That's great to hear. Thank you, guys, for the color. I'll return to the queue.
Speaker #6: Thank you, guys, for the call. I'll return to the Q.
Speaker #1: Mr. Malone, we have no further questions at this time. I'd like to turn the floor back over to you for closing comments.
Operator: Mr. Malone, we have no further questions at this time. I'd like to turn the floor back over to you for closing comments.
Operator: Mr. Malone, we have no further questions at this time. I'd like to turn the floor back over to you for closing comments.
Speaker #4: Thank you. As you can see, we are pleased with our results and look forward to keeping you updated on our progress. As always, please reach out with any questions.
Matthew Malone: Thank you. As you can see, we are pleased with our results and look forward to keeping you updated on our progress. As always, please reach out with any questions. Thank you, everyone, for joining us today and your interest in Graham.
Matt Malone: Thank you. As you can see, we are pleased with our results and look forward to keeping you updated on our progress. As always, please reach out with any questions. Thank you, everyone, for joining us today and your interest in Graham.
Speaker #4: Thank you, everyone, for joining us today and for your interest in
Speaker #4: GRAHM. Ladies and
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
