Q1 2027 Graham Corp Earnings Call

August 6, 2026

Speaker #1: Greetings. Welcome to the GRAHM Corporation Fiscal First Quarter 2027 Earnings Call. At this time, all participants are in question-and-answer session will follow the formal presentation.

Operator: Greetings. Welcome to the Graham Corporation Fiscal First Quarter 2027 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Tom Cook, Investor Relations. Thank you, Tom. You may begin.

Operator: Greetings. Welcome to the Graham Corporation Fiscal Q1 2027 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Tom Cook, Investor Relations. Thank you, Tom. You may begin.

Speaker #1: require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Tom Cook, Investor Relations.

Speaker #1: Thank you, Tom. You may begin.

Speaker #2: Thank you, Dylan, and good morning, everyone. Welcome to GRAHM's first quarter fiscal 2027 earnings call. With me on the call today are Matt Malone, President and CEO, and Chris Thome, Chief Financial Officer.

Tom Cook: Thank you, Dylan, and good morning, everyone. Welcome to Graham's First Quarter Fiscal 2027 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 first quarter fiscal 2027 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.

Tom Cook: Thank you, Dylan, and good morning, everyone. Welcome to Graham's Q1 Fiscal 2027 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 first quarter fiscal 2027 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 first quarter fiscal 2027 financial results. Our earnings release and accompanying presentation to today's call are available on our website at ir dot grahamcorp dot com.

Speaker #2: You should be aware that we may make forward-looking statements during the formal discussion, as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today.

Speaker #2: 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: 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.

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.

Speaker #2: 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.

Speaker #2: 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.

Tom Cook: 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. With that, if you'll please advance to slide three, I'll turn the call over to Matt to begin. Matt?

Speaker #2: These are operational measures and a quantitative reconciliation of each is not required or provided. You can find disclaimer regarding our use of KPIs at the back of today's presentation.

Speaker #2: So with that, if you'll please advance to slide three, I'll turn the call over to Matt to begin. Matt?

Tom Cook: With that, if you'll please advance to slide three, I'll turn the call over to Matt to begin. Matt?

Speaker #3: Thank you, Tom, and good morning, everyone. We appreciate you joining us to review our first quarter fiscal 2027 results. I'm pleased with the start to fiscal year 2027 as we continue to execute on our strategic priorities and see significant momentum across the end markets we serve.

Matt J. Malone: Thank you, Tom, and good morning, everyone. We appreciate you joining us to review our Q1 fiscal 2027 results. I'm pleased with the start to fiscal year 2027 as we continue to execute on our strategic priorities and see significant momentum across the end markets we serve. Our Q1 results demonstrate the continued growth and durability of our platform. We delivered record Q1 revenue of $71.3 million, an increase of 29%, with growth across each of our businesses. Adjusted EBITDA increased 28% to $8.8 million, totaling $95.9 million, and backlog increased to another record of $557 million. These results reflect the strength of our diversified business model, strong demand for our mission-critical technologies, and disciplined execution across the organization. The benefits of these investments we have made over the last several years are beginning to bear fruit as well.

Matt Malone: Thank you, Tom, and good morning, everyone. We appreciate you joining us to review our Q1 Fiscal 2027 Results. I'm pleased with the start to fiscal year 2027 as we continue to execute on our strategic priorities and see significant momentum across the end markets we serve. Our Q1 results demonstrate the continued growth and durability of our platform. We delivered record Q1 revenue of $71.3 million, an increase of 29%, with growth across each of our businesses. Adjusted EBITDA increased 28% to $8.8 million, totaling $95.9 million, and backlog increased to another record of $557 million. These results reflect the strength of our diversified business model, strong demand for our mission-critical technologies, and disciplined execution across the organization. The benefits of these investments we have made over the last several years are beginning to bear fruit as well.

Speaker #3: Our first quarter results demonstrate the continued growth and durability of our platform. We delivered record first quarter revenue of $71.3 million and increase of 29%, with growth across each of our businesses.

Speaker #3: Adjusted EBITDA increased 28% to $8.8 million. Totaling a total of $95.9 million and backlog increased to another record of $557 million. These results reflect the strength of our diversified business model strong demand for our mission-critical technologies and disciplined execution across the organization.

Speaker #3: The benefits of these investments we have made over the last several years are beginning to bear fruit as well. We have expanded capacity, strengthened our engineering and manufacturing capabilities, invested in automation and advanced testing infrastructure, modernized our systems, and broadened our technology portfolio through the acquisitions of Flaktech and XDOT.

Matt J. Malone: We have expanded capacity, strengthened our engineering and manufacturing capabilities, invested in automation and advanced testing infrastructure, modernized our systems, and broadened our technology portfolio through the acquisitions of FlackTek and Xdot. Many of these investments are now operational and beginning to support higher production volumes, new program opportunities, and improved operational performance. On our Q4 earnings call and our Investor Day in June, we provided our guidance for fiscal 2027, calling for 18% revenue growth and 44% Adjusted EBITDA growth. Our strong start to fiscal 2027 positions us well to achieve those targets. Additionally, we outlined how the investments are making, combined with favorable demand environment and our record backlog, position Graham for sustained profitable growth.

Matt Malone: We have expanded capacity, strengthened our engineering and manufacturing capabilities, invested in automation and advanced testing infrastructure, modernized our systems, and broadened our technology portfolio through the acquisitions of FlackTek and Xdot. Many of these investments are now operational and beginning to support higher production volumes, new program opportunities, and improved operational performance. On our Q4 earnings call and our Investor Day in June, we provided our guidance for fiscal 2027, calling for 18% revenue growth and 44% Adjusted EBITDA growth. Our strong start to fiscal 2027 positions us well to achieve those targets. Additionally, we outlined how the investments are making, combined with favorable demand environment and our record backlog, position Graham for sustained profitable growth.

Speaker #3: Many of these investments are now operational and beginning to support higher production volumes. New program opportunities and improved operational performance. On our first fourth quarter earnings call and our investor day in June, we provided our guidance for fiscal 2027, calling for 18% revenue growth and 44% adjusted EBITDA growth.

Speaker #3: Our strong start to fiscal 2027 positions us well to achieve those targets. Additionally, we outlined how the investments are making combined with favorable demand environment and our record backlog.

Speaker #3: Position GRAHM for sustained profitable growth. We introduced a three-year financial framework targeting 8 to 10 percent organic revenue growth. In adjusted EBITDA margins of 14 to 16 percent by fiscal year 2029.

Matt J. Malone: We introduced a three-year financial framework targeting 8% to 10% organic revenue growth and adjusted EBITDA margins of 14% to 16% by fiscal year 2029. With our sights set on achieving top quartile performance over time, during the quarter, we continued to make significant progress towards these goals. Turning to our end markets on slide four and starting with defense, demand remains very strong. Defense revenue increased 40% during the quarter, driven by timing of project milestones, new program activity, and continued growth across existing programs. Our performance reflects the strategic importance of the platforms we support, the durability of our customer relationships, and our ability to execute on highly complex mission-critical applications. Our naval business continues to benefit from increasing activity across the Columbia-class and Virginia-class submarine programs, as well as the MK 48 Mod 7 heavyweight torpedo program.

Matt Malone: We introduced a three-year financial framework targeting 8% to 10% organic revenue growth and adjusted EBITDA margins of 14% to 16% by fiscal year 2029. With our sights set on achieving top quartile performance over time, during the quarter, we continued to make significant progress towards these goals. Turning to our end markets on slide four and starting with defense, demand remains very strong. Defense revenue increased 40% during the quarter, driven by timing of project milestones, new program activity, and continued growth across existing programs. Our performance reflects the strategic importance of the platforms we support, the durability of our customer relationships, and our ability to execute on highly complex mission-critical applications. Our naval business continues to benefit from increasing activity across the Columbia-class and Virginia-class submarine programs, as well as the MK 48 Mod 7 heavyweight torpedo program.

Speaker #3: With our sights set on achieving top quartile performance over time. During the quarter, we continued to make significant progress towards these goals. Turning to our end markets on slide four and starting with defense.

Speaker #3: Demand remains very strong. Defense revenue increased 40% during the quarter. Driven by timing of project milestones, new program activity, and continued growth across existing programs.

Speaker #3: Our performance reflects the strategic importance of the platforms we support, the durability of our customer relationships, and our ability to execute on highly complex mission-critical applications.

Speaker #3: Our naval business continues to benefit from increasing activity across the Columbia, and Virginia class submarine programs. As well as the MK48 Mod 7 heavyweight torpedo program.

Speaker #3: During the first quarter, we received approximately $61.8 million of new and follow-on defense orders supporting these programs. Also, as we announced in our release last night, we secured a new contract to provide MK19 Mod 2 air turbine pump assemblies supporting submarine submarine fleet spares which when combined with the Mark 48 award in the first quarter totaled approximately $43 million.

Matt J. Malone: During the first quarter, we received approximately $61.8 million of new and follow-on defense orders supporting these programs. As we announced in our release last night, we secured a new contract to provide MK 19 Mod 2 air turbine pump assemblies supporting submarine fleet spares, which when combined with the Mark 48 award in the first quarter, totaled approximately $43 million. These awards are a validation of the investments we have made to increase our capacity and technical capabilities. Our new Navy and X-ray facilities in Batavia are operational. Our automated welding systems have been commissioned, and our assembly and test capabilities are increasingly supporting production. These investments improve throughput, enhance quality, and position us to meet increasing production requirements across critical Navy platforms for decades to come. Beyond our traditional Navy business, we continue to see attractive opportunities in next-generation defense applications, including radar and directed energy systems.

Matt Malone: During the first quarter, we received approximately $61.8 million of new and follow-on defense orders supporting these programs. As we announced in our release last night, we secured a new contract to provide MK 19 Mod 2 air turbine pump assemblies supporting submarine fleet spares, which when combined with the Mark 48 award in the first quarter, totaled approximately $43 million. These awards are a validation of the investments we have made to increase our capacity and technical capabilities. Our new Navy and X-ray facilities in Batavia are operational. Our automated welding systems have been commissioned, and our assembly and test capabilities are increasingly supporting production. These investments improve throughput, enhance quality, and position us to meet increasing production requirements across critical Navy platforms for decades to come. Beyond our traditional Navy business, we continue to see attractive opportunities in next-generation defense applications, including radar and directed energy systems.

Speaker #3: These awards are a validation of the investments we have made to increase our capacity and technical capabilities. Our new Navy and X-ray facilities in Batavia are operational.

Speaker #3: Our automated welding systems have been commissioned. And our assembly and test capabilities are increasingly supporting production. These investments improve throughput, enhance quality, and position us to meet increasing production requirements across critical Navy platforms for decades to come.

Speaker #3: Beyond our traditional Navy business, we continue to see attractive opportunities in next-generation defense applications. Including radar and directed energy systems. Our thermal management, cooling, power electronics, and turbo machinery technologies provide meaningful advantages in applications where customers require greater capability in increasingly compact systems.

Matt J. Malone: Our thermal management, cooling, power electronics, and turbomachinery technologies provide meaningful advantages in applications where customers require greater capability in increasingly compact systems. Several of these programs are transitioning from development to production and represent attractive multi-year growth opportunities. Moving to space, momentum continues to build. Space revenue increased 86% during the quarter, reflecting new programs, the continued ramp of existing programs, and contributions from FlackTek. Orders totaled $14.4 million, representing a book-to-bill of 2.3 times. Customers across both commercial and government-funded programs continue to advance from development and qualification into production. That progression is increasing demand for our highly engineered turbomachinery, cryogenic systems, pumps, motor controllers, and precision components. Our investments in testing and manufacturing capabilities are strengthening our competitive position as these programs scale.

Matt Malone: Our thermal management, cooling, power electronics, and turbomachinery technologies provide meaningful advantages in applications where customers require greater capability in increasingly compact systems. Several of these programs are transitioning from development to production and represent attractive multi-year growth opportunities. Moving to space, momentum continues to build. Space revenue increased 86% during the quarter, reflecting new programs, the continued ramp of existing programs, and contributions from FlackTek. Orders totaled $14.4 million, representing a book-to-bill of 2.3 times. Customers across both commercial and government-funded programs continue to advance from development and qualification into production. That progression is increasing demand for our highly engineered turbomachinery, cryogenic systems, pumps, motor controllers, and precision components. Our investments in testing and manufacturing capabilities are strengthening our competitive position as these programs scale.

Speaker #3: Several of these programs are transitioning from development to production and represent attractive multi-year growth opportunities. Moving to space, momentum continues to build. Space revenue increased 86% during the quarter reflecting new programs the continued ramp of existing programs and contributions from Flaktech.

Speaker #3: Orders totaled $14.4 million representing a book-to-bill of $2.3 times. Customers across both commercial and government-funded programs continue to advance from development and qualification into production.

Speaker #3: That progress that progression is increasing demand for our highly engineered turbo machinery, cryogenic systems, pumps, motor controllers, and precision components. Our investments in testing and manufacturing capabilities are strengthening our competitive position as these programs scale.

Speaker #2: Minutes. Just use your cell or should I call back? Did it come back? No.

David Brown: Just use your cell or should I call back?

Tom Cook: Just use your cell or should I call back?

Matt J. Malone: Did it come back?

Matt Malone: Did it come back?

David Brown: No.

Tom Cook: No.

Matt J. Malone: You just need-

Matt Malone: You just need-

Speaker #1: Ladies and gentlemen, please stay on the line. We are experiencing a technical difficulty. Please remain on the line. Hey Tom, can you hear us?

David Brown: Ladies and gentlemen, please stay on the line. We are experiencing a technical difficulty. Please remain on the line. Hey, Tom, can you hear us?

Operator: Ladies and gentlemen, please stay on the line. We are experiencing a technical difficulty. Please remain on the line. Hey, Tom, can you hear us?

Speaker #3: Yes, we can.

Matt J. Malone: Yes, we can.

Tom Cook: Yes, we can.

Speaker #1: Okay. All right.

David Brown: Okay. All right.

Operator: Okay. All right.

Speaker #3: Where did we stop? I

Matt J. Malone: Where did we stop?

Matt Malone: Where did we stop?

Speaker #1: You said our investments in particular manufacturing. I don't think it ever cut off. Okay. We'll continue.

David Brown: You said our investments in testing and manufacturing. I don't think it ever cut off. Okay. We'll continue.

Operator: You said our investments in testing and manufacturing. I don't think it ever cut off. Okay. We'll continue.

Speaker #3: Our investments in testing and manufacturing capabilities are strengthening our competitive position as these programs scale. Our liquid nitrogen testing capabilities are operational and actively supporting customer programs.

Matt J. Malone: Our investments in testing and manufacturing capabilities are strengthening our competitive position as these programs scale. Our liquid nitrogen testing capabilities are operational and actively supporting customer programs, while our cryogenic testing facility in Florida expands our ability to validate increasingly complex products before delivery. These capabilities allow us to provide customers with more fully tested and integration-ready solutions, helping reduce program risk while deepening Graham's role as a critical technology partner. As launch cadence increases and commercial and government space infrastructure continues to mature, we believe Graham is well positioned to participate across launch vehicles, satellites, lunar exploration systems, and other critical space platforms. Turning to energy and process, revenue increased 5% during the quarter. Continued strength in aftermarket activity and the addition of FlackTek helped offset ongoing pushouts in large capital projects within the refining and petrochemical markets.

Matt Malone: Our investments in testing and manufacturing capabilities are strengthening our competitive position as these programs scale. Our liquid nitrogen testing capabilities are operational and actively supporting customer programs, while our cryogenic testing facility in Florida expands our ability to validate increasingly complex products before delivery. These capabilities allow us to provide customers with more fully tested and integration-ready solutions, helping reduce program risk while deepening Graham's role as a critical technology partner. As launch cadence increases and commercial and government space infrastructure continues to mature, we believe Graham is well positioned to participate across launch vehicles, satellites, lunar exploration systems, and other critical space platforms. Turning to energy and process, revenue increased 5% during the quarter. Continued strength in aftermarket activity and the addition of FlackTek helped offset ongoing pushouts in large capital projects within the refining and petrochemical markets.

Speaker #3: While our cryogenic testing facility in Florida expands, our ability to validate increasingly complex products before delivery also grows. These capabilities allow us to provide customers with more fully tested and integration-ready solutions.

Speaker #3: Helping reduce program risk while deepening Graham's role as a critical technology partner. As launch cadence increases and commercial and government space infrastructure continues to mature, we believe Graham is well positioned to participate across launch vehicles, satellites, lunar exploration systems, and other critical space platforms.

Speaker #3: Turning to energy and process, revenue increased 5% during the quarter. Continued strength and aftermarket activity and the addition of Flaktech helped offset ongoing push-outs in large capital projects.

Speaker #3: Within the refining and petrochemical markets. Aftermarket revenue across energy and process and defense increased 20%. Demonstrating the value of our installed base and the reoccurring the reoccurring demand associated with maintaining mission-critical equipment.

Matt J. Malone: Aftermarket revenue across energy and process and defense increased 20%, demonstrating the value of our installed base and the reoccurring demand associated with maintaining mission-critical equipment. With more than $1 billion of Graham's installed equipment around the world, we see a meaningful opportunity to expand life cycle support, introduce new technologies into the install base, and deepen our customer relationships. Over time, growing our investment in aftermarket and reoccurring revenue streams should also support a more balanced business mix and improve profitability. Within new energy, we continue to see increasing customer engagement across small modular nuclear reactors, cryogenic applications, and other emerging energy technologies. These markets remain relatively early in their commercialization, but activity continues to build and our engineering expertise and mission-critical product portfolio position Graham to benefit as these technologies advance. Turning now to FlackTek, integration continues to progress extremely well.

Matt Malone: Aftermarket revenue across energy and process and defense increased 20%, demonstrating the value of our installed base and the reoccurring demand associated with maintaining mission-critical equipment. With more than $1 billion of Graham's installed equipment around the world, we see a meaningful opportunity to expand life cycle support, introduce new technologies into the install base, and deepen our customer relationships. Over time, growing our investment in aftermarket and reoccurring revenue streams should also support a more balanced business mix and improve profitability. Within new energy, we continue to see increasing customer engagement across small modular nuclear reactors, cryogenic applications, and other emerging energy technologies. These markets remain relatively early in their commercialization, but activity continues to build and our engineering expertise and mission-critical product portfolio position Graham to benefit as these technologies advance. Turning now to FlackTek, integration continues to progress extremely well.

Speaker #3: With more than $1 billion of Graham's installed equipment around the world, we see a meaningful opportunity to expand life cycle support. Introduce new technologies into the install base and deepen our customer relationships.

Speaker #3: Over time, growing our investment in aftermarket and reincurring revenue streams should also support a more balanced business mix and improve profitability. Within new energy, we continue to see increasing customer engagement across small modular nuclear reactors, cryogenic applications, and other emerging energy technologies.

Speaker #3: These markets remain relatively early in their commercialization, but activity continues to build and our engineering expertise in mission-critical product portfolio position Graham to benefit as these technologies advance.

Speaker #3: Turning now to Flaktech, integration continues to progress extremely well. Flaktech established established advanced materials processing is Graham's third core technology platform, alongside vacuum and heat transfer systems and turbo machinery.

Matt J. Malone: FlackTek established advanced materials processing as Graham's third core technology platform, alongside vacuum and heat transfer systems and turbomachinery. The business contributed $6.6 million of revenue and $13.3 million of orders during the quarter, representing a book-to-bill ratio of approximately two times. The strength of FlackTek's first quarter bookings reflects healthy customer engagement and attractive growth characteristics of the business. FlackTek brings differentiated intellectual property, reoccurring revenue, and exposure to several markets where Graham has already had deep relationships. We remain particularly excited about the commercialization potential of the Mega platform and the opportunity to introduce FlackTek's advanced materials processing solutions across our broader customer base. The teams are working well together, and we continue to add capabilities required to support growth.

Matt Malone: FlackTek established advanced materials processing as Graham's third core technology platform, alongside vacuum and heat transfer systems and turbomachinery. The business contributed $6.6 million of revenue and $13.3 million of orders during the quarter, representing a book-to-bill ratio of approximately two times. The strength of FlackTek's first quarter bookings reflects healthy customer engagement and attractive growth characteristics of the business. FlackTek brings differentiated intellectual property, reoccurring revenue, and exposure to several markets where Graham has already had deep relationships. We remain particularly excited about the commercialization potential of the Mega platform and the opportunity to introduce FlackTek's advanced materials processing solutions across our broader customer base. The teams are working well together, and we continue to add capabilities required to support growth.

Speaker #3: The business contributed $6.6 million of revenue and $13.3 million of orders during the quarter, representing a book-to-bill ratio of approximately two times. The strength of Flaktech's first quarter bookings reflects healthy customer engagement and attractive growth characteristics of the business.

Speaker #3: Flaktech brings differentiated intellectual property reoccurring revenue and exposure to several markets where Graham has already had deep relationships. We remain particularly excited about the commercialization potential of the mega platform and the opportunity to introduce Flaktech's advanced materials processing solutions across our broader customer base.

Speaker #3: The teams, our working well together, and we continue to add capabilities required to support growth. Flaktech remains an excellent example of our disciplined acquisition strategy.

Matt J. Malone: FlackTek remains an excellent example of our disciplined acquisition strategy, which is acquiring differentiated, engineer-led businesses that expand our addressable markets, strengthen our technology portfolio, and create opportunities for long-term profitable growth. Turning to the operational excellence and investments beginning on slide five. Our focus is increasingly moving from building capabilities to leveraging those capabilities. Over the last several years, we deliberately invested ahead of demand to expand capacity and capabilities, improve productivity, enhance quality, and broaden our product offerings. These investments include our Batavia Navy facility, automated welding, advanced X-ray systems, expanded assembly and testing capabilities in Colorado, cryogenic testing capabilities in Florida, and the modernization of our ERP systems. Many of these initiatives are now operational or approaching completion and are beginning to contribute to performance. Going forward, our focus is on increasing utilization, shortening production cycle times, improving throughput, and driving greater operational leverage as volume increases.

Matt Malone: FlackTek remains an excellent example of our disciplined acquisition strategy, which is acquiring differentiated, engineer-led businesses that expand our addressable markets, strengthen our technology portfolio, and create opportunities for long-term profitable growth. Turning to the operational excellence and investments beginning on slide five. Our focus is increasingly moving from building capabilities to leveraging those capabilities. Over the last several years, we deliberately invested ahead of demand to expand capacity and capabilities, improve productivity, enhance quality, and broaden our product offerings. These investments include our Batavia Navy facility, automated welding, advanced X-ray systems, expanded assembly and testing capabilities in Colorado, cryogenic testing capabilities in Florida, and the modernization of our ERP systems. Many of these initiatives are now operational or approaching completion and are beginning to contribute to performance. Going forward, our focus is on increasing utilization, shortening production cycle times, improving throughput, and driving greater operational leverage as volume increases.

Speaker #3: Which is acquiring a differentiated engineered-led businesses that expand our addressable markets strengthen our technology portfolio and create opportunities for long-term profitable growth. Turning to the operational excellence and investments beginning on slide five.

Speaker #3: Our focus is increasingly moving from building capabilities to leveraging those capabilities. Over the last several years, we deliberately invested ahead of demand to expand capacity and capabilities improve productivity enhance quality and broaden our product offerings.

Speaker #3: These investments include our Batavia Navy facility, automated welding, advanced X-ray systems, expanded assembly and testing capabilities in Colorado, cryogenic testing capabilities in Florida, and the modernization of our ERP systems.

Speaker #3: Many of these initiatives are now operational or approaching completion and are beginning to contribute to performance. Going forward, our focus is on increasing utilization, shortening production cycle times, improving throughput, and driving greater operational leverage as volume increases.

Speaker #3: We are also continuing to invest in the next phase of growth, including a construction of a new 30,000 square foot manufacturing facility on our Arbata campus.

Matt J. Malone: We are also continuing to invest in the next phase of growth, including the construction of a new 30,000 square foot manufacturing facility on our Arvada campus. This additional capacity will support increasing customer demand and further strengthen our ability to scale production across our growing portfolio of turbomachinery applications. Importantly, we evaluate these investments through a disciplined capital allocation framework and target returns above our 20% ROIC hurdle rate. We believe the combination of higher volumes, improved business mix, automation, and continued operational execution provides a clear path to margin expansion outlined at our Investor Day. Graham's recent investments encompass manufacturing, testing, automation, and system modernization, which each evaluated against that return threshold. These investments are needed in order to fulfill our backlog, which totaled $557 million at the end of the quarter. Importantly, the quality of our backlog remains strong.

Matt Malone: We are also continuing to invest in the next phase of growth, including the construction of a new 30,000 square foot manufacturing facility on our Arvada campus. This additional capacity will support increasing customer demand and further strengthen our ability to scale production across our growing portfolio of turbomachinery applications. Importantly, we evaluate these investments through a disciplined capital allocation framework and target returns above our 20% ROIC hurdle rate. We believe the combination of higher volumes, improved business mix, automation, and continued operational execution provides a clear path to margin expansion outlined at our Investor Day. Graham's recent investments encompass manufacturing, testing, automation, and system modernization, which each evaluated against that return threshold. These investments are needed in order to fulfill our backlog, which totaled $557 million at the end of the quarter. Importantly, the quality of our backlog remains strong.

Speaker #3: This additional capacity will support increasing customer demand and further strengthen our ability to scale production across our growing portfolio of turbo machinery applications. Importantly, we evaluate these investments through a disciplined capital allocation framework and target returns above our 20% ROIC hurdle rate.

Speaker #3: We believe the combination of higher volumes, improved business mix, automation and continued operational execution, provides a clear path to margin expansion outlined at our investor day.

Speaker #3: Graham's recent investments encompass manufacturing, testing, automation, and system modernization, which each evaluated against that return threshold. These investments are needed in order to fulfill our backlog, which totaled $557 million at the end of the quarter.

Speaker #3: Importantly, the quality of our backlog remains strong. Many of the programs we support are long cycle applications tied to critical customer priorities and extend over multiple years.

Matt J. Malone: Many of the programs we support are long-cycle applications tied to critical customer priorities and extend over multiple years. Combined with our active pipeline, expanding capabilities, and continued momentum across our markets, this backlog gives us confidence in both our fiscal year 2027 outlook and the long-term framework which we presented in June. Beyond fiscal year 2027, our priorities remain clear. We will continue expanding our participation in attractive markets, commercializing our proprietary technologies, growing aftermarket and recurring revenue, investing in operational excellence, and pursuing disciplined acquisitions that complement our organic growth strategy. We believe Graham has entered an important new phase. The foundation has been built, our backlog is at record levels, our capabilities are expanding, and the investments we have made are beginning to contribute more meaningfully. With that, I'll turn the call over to Chris for a detailed review of our financial results. Chris?

Matt Malone: Many of the programs we support are long-cycle applications tied to critical customer priorities and extend over multiple years. Combined with our active pipeline, expanding capabilities, and continued momentum across our markets, this backlog gives us confidence in both our fiscal year 2027 outlook and the long-term framework which we presented in June. Beyond fiscal year 2027, our priorities remain clear. We will continue expanding our participation in attractive markets, commercializing our proprietary technologies, growing aftermarket and recurring revenue, investing in operational excellence, and pursuing disciplined acquisitions that complement our organic growth strategy. We believe Graham has entered an important new phase. The foundation has been built, our backlog is at record levels, our capabilities are expanding, and the investments we have made are beginning to contribute more meaningfully. With that, I'll turn the call over to Chris for a detailed review of our financial results. Chris?

Speaker #3: Combined with our active pipeline, expanding capabilities, and continued momentum across our markets, this backlog gives us confidence in both our fiscal year 2027 outlook and the long-term framework which we presented in June.

Speaker #3: Beyond fiscal year 2027, our priorities remain clear. We will continue expanding our participation in attractive markets, commercializing our proprietary technologies, growing aftermarket and reoccurring revenue, investing in operational excellence, and pursuing disciplined acquisitions that complement organic growth strategy.

Speaker #3: We believe Graham has entered an important new phase, e, the foundation has been built, our backlog is at record levels, our capabilities are expanding, and the investments we have made are beginning to contribute more meaningfully.

Speaker #3: With that, I'll turn the call over to Chris for a detailed review of our financial results. Chris?

Speaker #1: Thanks, Matt. And good morning, everyone. Apologies for the slight technical difficulties earlier, but it appears we're back on track. I'll begin my formal remarks on slide six.

Chris J. Thome: Thanks, Matt, and good morning, everyone. Apologies for the slight technical difficulties earlier, but it appears we're back on track. I'll begin my formal remarks on slide six. We are off to a strong start for fiscal 2027, delivering record Q1 revenue while continuing to execute against our long-term growth strategy. Our results reflect broad-based demand across our diversified end markets, disciplined execution, and initial contributions from our strategic investments. Q1 revenue increased 29% to a record $71.3 million. On an organic basis, revenue was up an impressive 17%. This growth reflects the strength of our diversified revenue base, including continued momentum across our defense and space businesses, as well as contributions from FlakTek, which added $6.6 million of revenue during the quarter. Defense revenue increased 40% year over year, primarily driven by the timing of project milestones, new program awards, and continued growth across existing programs.

Chris Thome: Thanks, Matt, and good morning, everyone. Apologies for the slight technical difficulties earlier, but it appears we're back on track. I'll begin my formal remarks on slide six. We are off to a strong start for fiscal 2027, delivering record Q1 revenue while continuing to execute against our long-term growth strategy. Our results reflect broad-based demand across our diversified end markets, disciplined execution, and initial contributions from our strategic investments. Q1 revenue increased 29% to a record $71.3 million. On an organic basis, revenue was up an impressive 17%. This growth reflects the strength of our diversified revenue base, including continued momentum across our defense and space businesses, as well as contributions from FlakTek, which added $6.6 million of revenue during the quarter. Defense revenue increased 40% year over year, primarily driven by the timing of project milestones, new program awards, and continued growth across existing programs.

Speaker #1: We are off to a strong start for fiscal 2027. Delivering record first quarter revenue while continuing to execute against our long-term growth strategy. Our results reflect broad-based demand across our diversified end markets disciplined execution and initial contributions from our strategic investments.

Speaker #1: First quarter revenue increased 29% to a record $71.3 million. On an organic basis, revenue was up an impressive 17%. This growth reflects the strength of our diversified revenue base including continued momentum across our defense and space businesses as well as contributions from Flaktech, which added $6.6 million of revenue during the quarter.

Speaker #1: Defense revenue increased 40% year over year, primarily driven by the timing of project milestones, new program awards, and continued growth across existing programs. Space revenue increased 86% year over year.

Chris J. Thome: Space revenue increased 86% year over year, benefiting from new programs, the continued ramp of existing programs, and contributions from FlakTek. Within energy and process, revenue increased 5% from the prior year period as continued strength in aftermarket demand and the addition of FlakTek helped offset ongoing push-outs in large capital project activity. Aftermarket sales across energy and process and defense markets remained strong, increasing 20% year over year. Similar to our sales, our gross profit for the quarter increased 21% to $17.8 million. However, as a percentage of sales, our gross profit margin decreased to 25% compared with 26.5% in the prior year period.

Chris Thome: Space revenue increased 86% year over year, benefiting from new programs, the continued ramp of existing programs, and contributions from FlakTek. Within energy and process, revenue increased 5% from the prior year period as continued strength in aftermarket demand and the addition of FlakTek helped offset ongoing push-outs in large capital project activity. Aftermarket sales across energy and process and defense markets remained strong, increasing 20% year over year. Similar to our sales, our gross profit for the quarter increased 21% to $17.8 million. However, as a percentage of sales, our gross profit margin decreased to 25% compared with 26.5% in the prior year period.

Speaker #1: Benefiting from new programs that continued ramp of existing programs and contributions from Flaktech. Within energy and process revenue increased 5% from the prior year period as continued strength and aftermarket demand and the addition of Flaktech helped offset ongoing push-outs in large capital project activity.

Speaker #1: Aftermarket sales across energy and process and defense markets remained strong increasing 20% year over year. Similar to our sales, our gross profit for the quarter increased 21% to $17.8 million.

Speaker #1: However, as a percentage of sales, our gross profit margin decreased to 25% compared with 26.5% in the prior year period. The year-over-year decline in gross margin primarily reflects the mix of sales during the quarter.

Chris J. Thome: The year-over-year decline in gross margin primarily reflects the mix of sales during the quarter, which included a higher level of defense revenue and material receipts, which carry lower margin characteristics than many of our other businesses, and a tough comparable versus the prior year Q1. It is noteworthy that versus the sequential Q4 of fiscal 2026, our gross margin percentage increased 230 basis points. Moving to slide eight. Selling, general and administrative expenses increased $3.2 million during the quarter, primarily due to acquisition and integration activities, incremental costs associated with FlakTek, and our continued investments in people, processes, and technology. Note that these incremental investments are being made in order to enable our future growth and accelerate the commercialization of Graham products and technologies and are expected to amount to approximately $2.5 million in fiscal 2027.

Chris Thome: The year-over-year decline in gross margin primarily reflects the mix of sales during the quarter, which included a higher level of defense revenue and material receipts, which carry lower margin characteristics than many of our other businesses, and a tough comparable versus the prior year Q1. It is noteworthy that versus the sequential Q4 of fiscal 2026, our gross margin percentage increased 230 basis points. Moving to slide eight. Selling, general and administrative expenses increased $3.2 million during the quarter, primarily due to acquisition and integration activities, incremental costs associated with FlakTek, and our continued investments in people, processes, and technology. Note that these incremental investments are being made in order to enable our future growth and accelerate the commercialization of Graham products and technologies and are expected to amount to approximately $2.5 million in fiscal 2027.

Speaker #1: Which included a higher level of defense revenue and material receipts which carry lower margin characteristics than many of our other businesses. And the tough comparable versus the prior year first quarter.

Speaker #1: It is noteworthy that versus the sequential fourth quarter, a fiscal 2026, our gross margin percentage increased 230 basis points. Moving to slide eight, selling general and administrative expenses increased 3.2 million during the acquisition and integration activities incremental costs associated with Flaktech and our continued investments in people, processes, and technology.

Speaker #1: Note that these incremental investments are being made in order to enable our future growth and accelerate the commercialization of Graham products and technologies and are expected to amount to approximately $2.5 million in fiscal 2027.

Speaker #1: These increases were partially offset by lower costs associated with the barber nickels performance bonus which was no longer in effect during fiscal 2027. Net income for the first quarter was $3.9 million or $33 cents per diluted share.

Chris J. Thome: These increases were partially offset by lower costs associated with the Barber-Nichols performance bonus, which was no longer in effect during fiscal 2027. Net income for the first quarter was $3.9 million, or $0.33 per diluted share, compared with $4.6 million or $0.42 per diluted share in the prior year period. However, on an adjusted basis, adjusted net income for the quarter increased to $5.7 million, or $0.49 per diluted share, compared with $4.9 million or $0.45 per diluted share in the prior year, up 16% and 9% respectively. Similarly, adjusted EBITDA for the first quarter increased 28% to $8.8 million, representing an adjusted EBITDA margin of 12.3%, which was consistent with the prior year period. Overall, we believe these results demonstrate the resiliency of our business model and the effectiveness of our long-term strategy.

Chris Thome: These increases were partially offset by lower costs associated with the Barber-Nichols performance bonus, which was no longer in effect during fiscal 2027. Net income for the first quarter was $3.9 million, or $0.33 per diluted share, compared with $4.6 million or $0.42 per diluted share in the prior year period. However, on an adjusted basis, adjusted net income for the quarter increased to $5.7 million, or $0.49 per diluted share, compared with $4.9 million or $0.45 per diluted share in the prior year, up 16% and 9% respectively. Similarly, adjusted EBITDA for the first quarter increased 28% to $8.8 million, representing an adjusted EBITDA margin of 12.3%, which was consistent with the prior year period. Overall, we believe these results demonstrate the resiliency of our business model and the effectiveness of our long-term strategy.

Speaker #1: Compared with $4.6 million or $42 cents per diluted share in the prior year period. However, on an adjusted basis, adjusted net income for the quarter increased to $5.7 million or $49 cents per diluted share.

Speaker #1: Compared with $4.9 million, or $0.45 per diluted share, in the prior year—up 16% and 9%, respectively. Similarly, adjusted EBITDA for the first quarter increased 28% to $8.8 million, representing an adjusted EBITDA margin of 12.3%, which was consistent with the prior year period.

Speaker #1: Overall, we believe these results demonstrate the resiliency of our business model and the effectiveness of our long-term strategy. We continue to successfully balance investments for future growth while maintaining disciplined execution and positioning the company to capitalize on significant opportunities ahead.

Chris J. Thome: We continue to successfully balance investments for future growth while maintaining disciplined execution and positioning the company to capitalize on significant opportunities ahead. Moving to slide nine. Orders remained strong during the quarter and continued to reinforce the favorable demand environment across our core markets. Q1 orders were $96 million, resulting in a book-to-bill ratio of 1.3 times. This demonstrates the continued momentum we are seeing in our end markets and builds upon the 1.5 times book-to-bill ratio for fiscal 2026. Order activity continued to reflect strong demand across our defense business, including $61.8 million of new and follow-on orders supporting the U.S. Navy's Columbia-class and Virginia-class submarine programs, as well as the next option year for mission-critical hardware for the MK 48 Mod 7 heavyweight torpedo. Space orders continued their strong momentum from the prior year, totaling $14.4 million for the quarter, representing a 2.3 times book-to-bill ratio.

Chris Thome: We continue to successfully balance investments for future growth while maintaining disciplined execution and positioning the company to capitalize on significant opportunities ahead. Moving to slide nine. Orders remained strong during the quarter and continued to reinforce the favorable demand environment across our core markets. Q1 orders were $96 million, resulting in a book-to-bill ratio of 1.3 times. This demonstrates the continued momentum we are seeing in our end markets and builds upon the 1.5 times book-to-bill ratio for fiscal 2026. Order activity continued to reflect strong demand across our defense business, including $61.8 million of new and follow-on orders supporting the U.S. Navy's Columbia-class and Virginia-class submarine programs, as well as the next option year for mission-critical hardware for the MK 48 Mod 7 heavyweight torpedo. Space orders continued their strong momentum from the prior year, totaling $14.4 million for the quarter, representing a 2.3 times book-to-bill ratio.

Speaker #1: Moving to slide nine, orders remain strong during the quarter and continue to reinforce the favorable demand environment across our core markets. First quarter orders were $96 million resulting in a book-to-bill ratio of 1.3 times.

Speaker #1: This demonstrates the continued momentum we are seeing in our end markets and builds upon the 1.5 times book-to-bill ratio for fiscal 2026. Order activity continued to reflect strong demand across our defense business.

Speaker #1: Including 61.8 million of new and follow-on orders supporting the US Navy's Columbia and Virginia class submarine programs as well as the next option year for mission-critical hardware for the MK48 Mod 7 heavyweight torpedo.

Speaker #1: Space orders continued their strong momentum from the prior year totaling 14.4 million for the quarter. Representing a 2.3 times book-to-bill ratio. While Flaktech generated 13.2 million of orders during the quarter, representing a two times book-to-bill ratio.

Chris J. Thome: While FlackTek generated $13.2 million of orders during the quarter, representing a 2 times book-to-bill ratio. As a result, backlog increased to another record, $557 million, up 15% from the prior year period, and is the sixth consecutive quarter of record backlog. We continue to expect approximately 35% to 40% of backlog to convert into revenue over the next 12 months and another 20% to 25% the following year, demonstrating the high visibility and stability of our business. Turning to slide 10, our balance sheet remains exceptionally strong and provides significant flexibility to continue executing our strategic priorities. During the quarter, we strengthened our balance sheet through the previously announced $50 million strategic investment from accounts advised by T. Rowe Price and utilized approximately $13 million of the proceeds to repay our outstanding debt.

Chris Thome: While FlackTek generated $13.2 million of orders during the quarter, representing a 2 times book-to-bill ratio. As a result, backlog increased to another record, $557 million, up 15% from the prior year period, and is the sixth consecutive quarter of record backlog. We continue to expect approximately 35% to 40% of backlog to convert into revenue over the next 12 months and another 20% to 25% the following year, demonstrating the high visibility and stability of our business. Turning to slide 10, our balance sheet remains exceptionally strong and provides significant flexibility to continue executing our strategic priorities. During the quarter, we strengthened our balance sheet through the previously announced $50 million strategic investment from accounts advised by T. Rowe Price and utilized approximately $13 million of the proceeds to repay our outstanding debt.

Speaker #1: As a result, backlog increased to another record $557 million. Up 15% from the prior year period. And is the sixth consecutive quarter of record backlog.

Speaker #1: We continue to expect approximately 35 to 40 percent of backlog to convert into revenue over the next 12 months and another 20% to 25% the following year demonstrating the high visibility and stability of our business.

Speaker #1: Turning to slide 10, our balance sheet remains exceptionally strong and provides significant flexibility to continue executing our strategic priorities. During the quarter, we strengthened our balance sheet through the previously announced $50 million strategic investment from accounts advised by T.

Speaker #1: Rowe Price and utilized approximately $13 million of the proceeds to repay our outstanding debt. Net cash used by operating activities during the quarter was $12.7 million.

Chris J. Thome: Net cash used by operating activities during the quarter was $12.7 million and primarily reflects the timing of billing and collections on accounts receivable, unbilled revenue and customer deposits, and the payment of fiscal 2026 bonuses during the quarter, which included the Barber-Nichols performance bonus. Capital expenditures during the quarter totaled $2.6 million and remained focused on capacity expansion, expanding capabilities and productivity improvements. As a result, we ended the quarter with $27 million of cash on hand, no outstanding debt, and approximately $75 million of available capacity under our revolving credit facility, which provides us significant flexibility to execute our strategic, organic, and inorganic growth plans. Turning to guidance, slide 11 outlines our outlook for fiscal 2027, which remains unchanged from Q4.

Chris Thome: Net cash used by operating activities during the quarter was $12.7 million and primarily reflects the timing of billing and collections on accounts receivable, unbilled revenue and customer deposits, and the payment of fiscal 2026 bonuses during the quarter, which included the Barber-Nichols performance bonus. Capital expenditures during the quarter totaled $2.6 million and remained focused on capacity expansion, expanding capabilities and productivity improvements. As a result, we ended the quarter with $27 million of cash on hand, no outstanding debt, and approximately $75 million of available capacity under our revolving credit facility, which provides us significant flexibility to execute our strategic, organic, and inorganic growth plans. Turning to guidance, slide 11 outlines our outlook for fiscal 2027, which remains unchanged from Q4.

Speaker #1: And primarily reflects the timing of billing and collections on accounts receivable, unbilled revenue, and customer deposits and the payment of fiscal 2026 bonuses during the quarter which included the barber nickels performance bonus.

Speaker #1: Capital expenditures during the quarter totaled $2.6 million and remained focused on capacity expansion expanding capabilities and productivity improvements. As a result, we ended the quarter with $27 million of cash on hand, no outstanding debt, and approximately $75 million of available capacity under our revolving credit facility.

Speaker #1: Which provides us significant flexibility to execute our strategic organic and inorganic growth plans. Turning to guidance, slide 11 outlines our outlook for fiscal 2027 which remains unchanged from last quarter.

Speaker #1: We continue to expect revenue to be in the range of $285 million to $295 million supported by our record backlog favorable demand environment a full year contribution from Flaktech and continued execution across our businesses.

Chris J. Thome: We continue to expect revenue to be in the range of $285 million to 295 million, supported by our record backlog, favorable demand environment, a full year contribution from FlackTek, and continued execution across our businesses. We continue to expect gross margin to be between 24.5% and 25.5%, reflecting the benefits of operational improvements, automation investments, productivity initiatives, integration efforts, and an improved sales mix versus fiscal 2026. SG&A expense is expected to be between 16.5% and 17.5% of sales, and as mentioned earlier, includes approximately $2.5 million of incremental investments in people, processes, and technology to support our commercialization initiatives and future growth. Embedded within our outlook are approximately $5.5 million to 6.5 million of equity-based compensation, acquisition and integration costs, and ERP conversion costs.

Chris Thome: We continue to expect revenue to be in the range of $285 million to 295 million, supported by our record backlog, favorable demand environment, a full year contribution from FlackTek, and continued execution across our businesses. We continue to expect gross margin to be between 24.5% and 25.5%, reflecting the benefits of operational improvements, automation investments, productivity initiatives, integration efforts, and an improved sales mix versus fiscal 2026. SG&A expense is expected to be between 16.5% and 17.5% of sales, and as mentioned earlier, includes approximately $2.5 million of incremental investments in people, processes, and technology to support our commercialization initiatives and future growth. Embedded within our outlook are approximately $5.5 million to 6.5 million of equity-based compensation, acquisition and integration costs, and ERP conversion costs.

Speaker #1: We continue to expect gross margin to be between $24.5% and $25.5% reflecting the benefits of operational improvements automation investments productivity initiatives integration efforts and an improved sales mix versus fiscal 2026.

Speaker #1: SG&A expenses expected to be between $16.5% and $17.5% of sales. And as mentioned earlier, includes approximately $2.5 million of incremental investments in people, processes, and technology to support our commercialization initiatives and future growth.

Speaker #1: Embedded within our outlook are approximately $5.5 million to $6.5 million of equity-based compensation, acquisition and integration costs, and ERP conversion costs. Based on these assumptions, we continue to expect adjusted EBITDA to be between $35 million and $40 million, representing an increase of 44% at the midpoint of that range and unchanged from last quarter.

Chris J. Thome: Based on these assumptions, we continue to expect adjusted EBITDA to be between $35 million and 40 million, representing an increase of 44% at the midpoint of that range and unchanged from last quarter. We also continue to expect our capital expenditures to be between $18 million and 22 million as we continue investing in strategic growth initiatives, expanded operational capabilities, and productivity-enhancing projects, including construction of a new 30,000 sq ft manufacturing facility in Arvada. Before I conclude, I'd like to briefly revisit the long-term financial framework we introduced at our investor day in June, shown on slide 12. As we discussed then, our confidence in the outlook extends well beyond fiscal 2027, supported by our record backlog, strong demand across our defense space and energy and process markets, and the investments we have made over the past several years.

Chris Thome: Based on these assumptions, we continue to expect adjusted EBITDA to be between $35 million and 40 million, representing an increase of 44% at the midpoint of that range and unchanged from last quarter. We also continue to expect our capital expenditures to be between $18 million and 22 million as we continue investing in strategic growth initiatives, expanded operational capabilities, and productivity-enhancing projects, including construction of a new 30,000 sq ft manufacturing facility in Arvada. Before I conclude, I'd like to briefly revisit the long-term financial framework we introduced at our investor day in June, shown on slide 12. As we discussed then, our confidence in the outlook extends well beyond fiscal 2027, supported by our record backlog, strong demand across our defense space and energy and process markets, and the investments we have made over the past several years.

Speaker #1: We also continue to expect our capital expenditures to be between $18 million and $22 million as we continue investing in strategic growth initiatives expanded operational capabilities and productivity enhancing projects including construction of a new 30,000 square foot manufacturing facility in Arvada.

Speaker #1: Before I conclude, I'd like to briefly revisit the long-term financial framework we introduced at our investor day in June. Shown on slide 12. As we discussed then, our confidence in the outlook extends well beyond fiscal 2027 supported by our record backlog strong demand across our defense, space, and energy and process markets and the investments we have made over the past several years.

Speaker #1: We continue to expect organic revenue growth of approximately 8 to 10 percent annually over the next several years. At the same time, we believe we have a clear path to continued margin expansion through a combination of higher production volumes, a more balanced business mix, ongoing operational improvement initiatives, and continued leverage from our manufacturing and automation investments.

Chris J. Thome: We continue to expect organic revenue growth of approximately 8% to 10% annually over the next several years. At the same time, we believe we have a clear path to continued margin expansion through a combination of higher production volumes, a more balanced business mix, ongoing operational improvement initiatives, and continued leverage from our manufacturing and automation investments. We expect adjusted EBITDA margins to expand into the 14% to 16% range by fiscal 2029. Importantly, we do not view fiscal 2029 as the finish line. Our objective remains to be and to build a best-in-class industrial technology company capable of delivering top quartile financial performance over time. Overall, we are pleased with our strong start to fiscal 2027.

Chris Thome: We continue to expect organic revenue growth of approximately 8% to 10% annually over the next several years. At the same time, we believe we have a clear path to continued margin expansion through a combination of higher production volumes, a more balanced business mix, ongoing operational improvement initiatives, and continued leverage from our manufacturing and automation investments. We expect adjusted EBITDA margins to expand into the 14% to 16% range by fiscal 2029.

Speaker #1: We expect adjusted EBITDA margins to expand into the 14% to 16% range by fiscal 2029. Importantly, we do not view fiscal 2029 as the finish line.

Chris Thome: Importantly, we do not view fiscal 2029 as the finish line. Our objective remains to be and to build a best-in-class industrial technology company capable of delivering top quartile financial performance over time. Overall, we are pleased with our strong start to fiscal 2027. Our record backlog, healthy demand across our end markets, disciplined execution, and strong balance sheet position us well to deliver another year of profitable growth while continuing to invest in long-term opportunities ahead. With that, operator, we are now ready for questions.

Speaker #1: Our objective remains to be and to build a best in class industrial technology company capable of delivering top quartile financial performance over time. Overall, we are pleased with our strong start to fiscal 2027.

Speaker #1: Our record backlog, healthy demand across our end markets, disciplined execution, and strong balance sheet position us well to deliver another year of profitable growth while continuing to invest in long-term opportunities ahead.

Chris J. Thome: Our record backlog, healthy demand across our end markets, disciplined execution, and strong balance sheet position us well to deliver another year of profitable growth while continuing to invest in long-term opportunities ahead. With that, operator, we are now ready for questions.

Speaker #1: With that, operator, we are now ready for questions.

Speaker #2: 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'd 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'd 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. Our first question comes from Robert Brooks with Northland Capital. Please go ahead.

Speaker #2: 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.

Speaker #2: For our participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions.

Speaker #2: Our first question comes from Robert Brooks with Northland Capital. Please go ahead.

Speaker #3: Hey, good morning team, and thank you for taking my question. I just one of the things I wanted to unpack the robust strength and the space segment sales up 86% year over year orders even stronger 2.3 book to bill I believe.

Robert Brooks: Hey, good morning, team. Thank you for taking my question. Just one of the things I wanted to unpack, the robust strength in the space segment sales up 86% year-over-year, orders even stronger, 2.3 book-to-bill, I believe. That would suggest to me that this is more than maybe just a timing benefit and something more structural occurring. Is my logic fair there? Just any color on specific drivers on the strength and expectations going forward.

Speaker #3: So that would suggest to me that this is more than maybe just a timing benefit and something more structural occurring. Is my logic fair there?

Speaker #3: And just any color on specific drivers on the strength and expectations going forward.

Speaker #4: Yeah, thanks Bobby. You know the structural change you know began last year and you could see it through the strong order volume last year you know as well as the first quarter this year.

Matt J. Malone: Yeah. Thanks, Bobby. The structural change began last year. You could see it through the strong order volume last year, as well as the Q1 this year. Our space business, just like our other businesses, the orders can be very lumpy. We don't expect this level every quarter. The current run rate of revenue for the quarter is the new norm. You could expect that going forward.

Matt Malone: Yeah. Thanks, Bobby. The structural change began last year. You could see it through the strong order volume last year, as well as the Q1 this year. Our space business, just like our other businesses, the orders can be very lumpy. We don't expect this level every quarter. The current run rate of revenue for the quarter is the new norm. You could expect that going forward.

Speaker #4: You know our space business just like our other businesses the orders can be very lumpy. So you know we don't expect this level every quarter.

Speaker #4: But the current run rate of revenue for the quarter is the new norm. So I you could expect that you know going forward.

Speaker #3: That's great to hear. And then just this like specific projects or is it just as simple as like more things getting shot up in the space that opens up more opportunities for you just what maybe end market wise is driving that higher floor going forward?

Robert Brooks: That's great to hear. Just specific projects, or is it just as simple as more things getting shot up into space that opens up more opportunities for you? Just what maybe end market-wise is driving that higher floor going forward?

Speaker #4: Yeah, you know as we've said you know for the last several quarters it's just that you know some of the development programs that we've been on for the last year or so you know have started to hit production volumes and you know are ramping up.

Matt J. Malone: Yeah. As we've said for the last several quarters, it's just that some of the development programs that we've been on for the last year or so have started to hit production volumes and are ramping up. That's really just the continuation of those programs.

Matt Malone: Yeah. As we've said for the last several quarters, it's just that some of the development programs that we've been on for the last year or so have started to hit production volumes and are ramping up. That's really just the continuation of those programs.

Speaker #4: So that's really just the continuation of those programs.

Speaker #3: Got it. And one of my key takeaways from the investor day in June was a much deeper appreciation for flag text technology. And I even had the flag text face myself as I as a Matt showed me the the demonstration from me.

Robert Brooks: Got it. One of my key takeaways from the Investor Day in June was a much deeper appreciation for FlakTek technology, and I even had the FlakTek face myself as Matt showed me the demonstration for me. I just wanted to ask, eight months into your ownership, any specific wins you'd call out that came about from either you introducing a legacy Graham customer to FlakTek or just from broadly having the infrastructure benefit of being under a larger company like Graham? Just color there.

Speaker #3: So I just wanted to ask eight months into your ownership any specific wins you'd call out that came about from either you introducing a legacy grand customer to flag tech or just from broadly having the infrastructure benefit of being under a larger company like Graham.

Speaker #3: Just color there.

Speaker #4: Yeah, I mean you can see from our book to bill at flag tech they can feel the support of Graham and what I'll say is the integration has gone extremely well.

Matt J. Malone: Yeah. You can see from our book-to-bill, at FlakTek, they can feel the support of Graham, and what I'll say is the integration has gone extremely well. The leader of that business, Matt Gross, has done a great job. The staff has really stepped up and become really engaged in the path forward. With that being said, I can talk high level on a few examples. They happen to be at Barber-Nichols as we speak right now because there's quite a few applications that are directly applicable. Bobby, we're seeing a lot of opportunity on, I'll say, advanced space applications, specifically adhesives for critical components that provide re-entry and other sort of examples. The short of it is, they really are changing the game versus bladed mixing.

Matt Malone: Yeah. You can see from our book-to-bill, at FlakTek, they can feel the support of Graham, and what I'll say is the integration has gone extremely well. The leader of that business, Matt Gross, has done a great job. The staff has really stepped up and become really engaged in the path forward. With that being said, I can talk high level on a few examples. They happen to be at Barber-Nichols as we speak right now because there's quite a few applications that are directly applicable.

Speaker #4: The leader of that business Matt Gross has done a great job. And the staff has really stepped up and become you know really engaged in the path forward.

Speaker #4: With that being said, I can talk high level on a few examples. They happen to be at Barbara Nichols as we speak right now because there's quite a few applications that are directly applicable.

Speaker #4: But Bobby, we're seeing a lot of opportunity on I'll say advanced space applications specifically you know adhesives for critical components that you know provide reentry and other sort of examples.

Matt Malone: Bobby, we're seeing a lot of opportunity on, I'll say, advanced space applications, specifically adhesives for critical components that provide re-entry and other sort of examples. The short of it is, they really are changing the game versus bladed mixing. You got to see it in person at the Investor Day, I recall, and we're seeing that across a bunch of different end markets. I would say aerospace and defense in space specifically are where we're seeing the most opportunity right now.

Speaker #4: The short of it is is they really are changing the game versus bladed mixing. So you got to see it in person at the investor day I recall and we're seeing that across a bunch of different end markets.

Matt J. Malone: You got to see it in person at the Investor Day, I recall, and we're seeing that across a bunch of different end markets. I would say aerospace and defense in space specifically are where we're seeing the most opportunity right now.

Speaker #4: I would say aerospace and defense and space specifically are where we're seeing the most opportunity right now.

Speaker #3: Appreciate the call and congrats on another terrific caller.

Robert Brooks: Appreciate the call, congrats on another terrific quarter.

Speaker #4: Thanks. Thanks Bobby.

Matt J. Malone: Thanks, Bobby.

Matt Malone: Thanks, Bobby.

Robert Brooks: Appreciate it.

Speaker #2: Our next question comes from Russell Stanley with Beacon Securities. Please go ahead.

Operator: Our next question comes from Russell Stanley with Beacon Securities. Please go ahead.

Speaker #5: Good morning and congrats on the on the quarter and another strong quarter for orders. You noted obviously the contributions from the submarine programs to orders in the quarter.

Russell Stanley: Good morning, congrats on the quarter and another strong quarter for orders. You noted, obviously, the contributions from the submarine programs to orders in the quarter. Last week, we saw the big awards go to General Dynamics and Huntington Ingalls. I'm just wondering to what extent those orders from last week were already in your backlog or what the implications are for those orders for the pipeline for additional orders out of those programs for you.

Speaker #5: We you know last week we saw the big awards go to go to General Dynamics and Huntington Ingles. I'm just wondering to what extent those orders from last week were already in your backlog or what that what the implications are for those orders for the pipeline for additional orders out of those programs for you.

Speaker #4: Yeah, so Russell obviously it's a mix of all the above. You know some of them in some of them not. The reality for us is it's just more of a confirmation of how strategic these programs are in long term.

Matt J. Malone: Yeah. Russell, obviously, it's a mix of all the above. Some of them in, some of them not. The reality for us is it's just more of a confirmation of how strategic these programs are in long term. We continue to feel the tailwinds and the desire to accelerate submarine production, and we think we're well positioned. With that, our investments that we put in place have been well received, and we continue to see not only the need for us to execute our backlog, but also the pipeline remains strong. Keep it high level there.

Matt Malone: Yeah. Russell, obviously, it's a mix of all the above. Some of them in, some of them not. The reality for us is it's just more of a confirmation of how strategic these programs are in long term. We continue to feel the tailwinds and the desire to accelerate submarine production, and we think we're well positioned. With that, our investments that we put in place have been well received, and we continue to see not only the need for us to execute our backlog, but also the pipeline remains strong. Keep it high level there.

Speaker #4: We continue to feel the tailwinds and the desire to accelerate submarine production, and we think we're well positioned. So, with that, our investments that we put in place have been, you know, well received, and we continue to see not only the need for us to execute our backlog, but also the pipeline remain strong.

Speaker #4: So keep it high level there.

Speaker #5: Understood. Maybe if I could follow up on one of your remarks I think from the June call Matt you talked a bit about munitions we're seeing obviously a lot of headlines around shortages on that front.

Russell Stanley: Understood. Maybe if I could follow up on one of your remarks, I think from the June call, Matt, you talked a bit about munitions. We're seeing, honestly, a lot of headlines around shortages on that front. I'm wondering if you can talk about what you're seeing now and the opportunities out there and how much of a tailwind that might be for Graham.

Speaker #5: Wondering if you can talk about what you're seeing now in the opportunity set there and how much of a tailwind that might be for Graham.

Speaker #4: Yeah, missiles had not been a conventional market for Graham. Specifically torpedoes were the area that we played and you know we've seen that demand across the Mark 48 platform which of course we've you know just published yet another year over year follow on order.

Matt J. Malone: Yeah. Missiles had not been a conventional market for Graham. Specifically torpedoes were the area that we played, and we've seen that demand across the Mark 48 platform, which of course we've just published yet another year-over-year follow-on order. We're continuing to see opportunity in the torpedo space. FlackTek really is the business that opened our eyes to the missile production side. Obviously, there's been quite a bit of publicity about the Mega being involved in some critical developments on the missile, specifically the solid rocket motors. What I will say is, as we've learned that business through FlackTek, we are seeing opportunities more broadly across Graham. I can't talk in too much detail, but most specifically around Barber-Nichols with rotating machines, et cetera.

Matt Malone: Yeah. Missiles had not been a conventional market for Graham. Specifically torpedoes were the area that we played, and we've seen that demand across the Mark 48 platform, which of course we've just published yet another year-over-year follow-on order. We're continuing to see opportunity in the torpedo space. FlackTek really is the business that opened our eyes to the missile production side. Obviously, there's been quite a bit of publicity about the Mega being involved in some critical developments on the missile, specifically the solid rocket motors. What I will say is, as we've learned that business through FlackTek, we are seeing opportunities more broadly across Graham. I can't talk in too much detail, but most specifically around Barber-Nichols with rotating machines, et cetera. I'll keep it kind of high level, but our early entry into missiles was through FlackTek, and we're seeing some broader opportunity.

Speaker #4: So we're continuing to see opportunity in the torpedo space. Flag tech really is the business that opened our eyes to the missile production side and you know obviously there's been quite a bit of publicity about the mega being involved in some critical developments on the missile specifically the solid rocket motors what I will say is as we've learned that business through flag tech we are seeing opportunities more broadly across Graham.

Speaker #4: I can't talk in too much detail but most specifically around Barbara Nichols with rotating machines etc. So I'll keep it kind of high level but our early entry in the missiles was through flag tech and we're seeing some broader opportunity.

Matt J. Malone: I'll keep it kind of high level, but our early entry into missiles was through FlackTek, and we're seeing some broader opportunity.

Speaker #5: Excellent. Maybe one more from me and I'll get back in the queue on gross margins. You know you talked about the year over year drivers but on the quarter over quarter lift 230 beats was that largely scale economies on a strong top line or can you talk to the other drivers behind that?

Russell Stanley: That's great. Maybe one more from me, and I'll get back in the queue on gross margins. You talked about the year-over-year drivers, but on the quarter-over-quarter lift, 230 basis points, was that largely scale economies on a strong top line, or can you talk to the other drivers behind that? Sorry if I missed it earlier, but I'd love to hear more color there.

Speaker #5: Sorry if I missed it earlier but I'll love to hear more color there.

Speaker #4: Yeah, you know as we mentioned on our fourth quarter call Russ we had some impacts from initial purchase accounting adjustments for flag tech in the fourth quarter.

Chris J. Thome: Yeah. As we mentioned on our Q4 call, Russ, we had some impacts from initial purchase accounting adjustments for FlackTek in the Q4. Largely, if you look at our margin quarter-over-quarter and all the variances, it directly correlates with the mix of defense. We had about 58% of our revenue this quarter was in defense versus 60% in the Q4, but versus 53% last year. It really is directly correlated to the defense, as you know, which is a lower margin business versus our commercial portfolios, which is why we want to get closer to that 50/50 mix as time goes on.

Chris Thome: Yeah. As we mentioned on our Q4 call, Russ, we had some impacts from initial purchase accounting adjustments for FlackTek in the Q4. Largely, if you look at our margin quarter-over-quarter and all the variances, it directly correlates with the mix of defense. We had about 58% of our revenue this quarter was in defense versus 60% in the Q4, but versus 53% last year. It really is directly correlated to the defense, as you know, which is a lower margin business versus our commercial portfolios, which is why we want to get closer to that 50/50 mix as time goes on.

Speaker #4: But largely if you look at our margin quarter over quarter in all the variances it directly correlates you know with the mix of defense.

Speaker #4: So you know we had about 58% of our revenue this quarter was in defense versus 60 in the fourth quarter. But versus 53% last year.

Speaker #4: So it really is directly correlated to the defense as you know which is you know a lower margin business versus our commercial portfolio which is why we want to get closer to that 50-50 mix as time goes on.

Speaker #5: Got it. That's great color. Thanks. I'll get back in the queue. Congrats again.

Russell Stanley: Got it. That's great color. Thanks. I'll get back in the queue. Congrats again.

Speaker #4: Thanks Russ.

Chris J. Thome: Thanks, Russ.

Chris Thome: Thanks, Russ.

Speaker #2: Once again if you would like to ask a question please press star one on your telephone keypad. Our next question comes from Christopher Glynn with Oppenheimer & Co.

Matt J. Malone: Thanks.

Matt Malone: Thanks.

Operator: Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Christopher Glynn with Oppenheimer & Co. Please go ahead.

Speaker #2: Please go ahead.

Speaker #4: Thanks. Good morning everyone. So the just curious about some of the you know mixed developments in defense orders. I think this year's orders included you know follow ons with the subs but also some new orders.

Christopher Glynn: Thanks. Good morning, everyone. Just curious about some of the mixed developments in defense orders. I think this year's orders included follow-ons with the subs, but also some new orders. I think some new design applications are indicated there. The big chunk last year, I think, was all follow-on orders. Just curious about the idea of diversification and expansion of the revenue sources or even the order sources, relative to the main sub and torpedo programs.

Speaker #4: I think some new design applications are indicated there. And the big chunk last year, I think, was all follow-on orders. So, just curious about the idea of diversification and expansion of the revenue sources or even the order sources.

Speaker #4: You know, relative to the main sub and torpedo programs—yeah, it's a good question. Still, the lion's share of courses is in the submarine platforms.

Matt J. Malone: Yeah, it's a good question. The lion's share, of course, is in the submarine platforms, most specifically, the Virginia-class and Columbia-class subs. We continue to see healthy demand there, and while there's tailwinds, obviously, we're going to continue to step up. I think a few things of note that I'll go into more detail, as it pertains specifically to aerospace and defense. The first is, some of these solicitations are competitive, and they allow for healthier margins. We're winning not only the sole source opportunities, Chris, but we're also today winning opportunities where we had competitors. With that, more broadly, we continue to see programs like we mentioned at our investor day, specifically around radar and laser platforms, where we're doing the thermal management or cooling solutions. We are seeing those programs move into production. We're seeing some diversification there.

Matt Malone: Yeah, it's a good question. The lion's share, of course, is in the submarine platforms, most specifically, the Virginia-class and Columbia-class subs. We continue to see healthy demand there, and while there's tailwinds, obviously, we're going to continue to step up. I think a few things of note that I'll go into more detail, as it pertains specifically to aerospace and defense. The first is, some of these solicitations are competitive, and they allow for healthier margins. We're winning not only the sole source opportunities, Chris, but we're also today winning opportunities where we had competitors. With that, more broadly, we continue to see programs like we mentioned at our investor day, specifically around radar and laser platforms, where we're doing the thermal management or cooling solutions. We are seeing those programs move into production. We're seeing some diversification there.

Speaker #4: Most strategically the our most specifically the Virginia and Columbia class subs. We continue to see healthy demand there and while there's tailwinds obviously we're going to continue to step up.

Speaker #4: I think one thing a few things of note that I'll go into more detail. As it pertains specifically to aerospace and defense. The first is you know some of these solicitations are competitive and they allow for healthier margins.

Speaker #4: So we're winning not only the sole source opportunities Chris but we're also today winning opportunities where we did have competitive we had competitors. With that more broadly we continue to see programs like we mentioned at our investor day specifically around radar and laser platforms where we're doing the thermal management or cooling solutions.

Speaker #4: We are seeing those programs move from into production. And so we're seeing some diversification there. What's nice about a program like that is we bring the intellectual property to the table and that is a I'll say a commercially available product that we use in defense.

Matt J. Malone: What's nice about a program like that is we bring the intellectual property to the table, and that is, I'll say, a commercially available product that we use in defense. We're able to, I'll just say, charge market-bearing prices on those programs rather than go through certified cost and pricing. The diversification is coming in a few areas. Another area where we're feeling growth and feeling potential is around the torpedo space. I can't get into much detail there, but obviously we provide the Mark 48, and we're seeing opportunity for continued growth and diversification. The lion's share is in the submarine and aircraft carrier. That's sole sourced and under TINA cost and pricing. The other up and comings, we've seen the ability to differentiate and get higher margin.

Matt Malone: What's nice about a program like that is we bring the intellectual property to the table, and that is, I'll say, a commercially available product that we use in defense. We're able to, I'll just say, charge market-bearing prices on those programs rather than go through certified cost and pricing. The diversification is coming in a few areas. Another area where we're feeling growth and feeling potential is around the torpedo space. I can't get into much detail there, but obviously we provide the Mark 48, and we're seeing opportunity for continued growth and diversification. The lion's share is in the submarine and aircraft carrier. That's sole sourced and under TINA cost and pricing. The other up and comings, we've seen the ability to differentiate and get higher margin.

Speaker #4: So we're able to I'll just say charge market bearing prices on those programs rather than go through certified costs and pricing. So the diversification is coming in a few areas.

Speaker #4: Another area where we're feeling growth and feeling potential is around the torpedo space. I can't get into much detail there but obviously we provide the Mark 48 and we're seeing opportunity for continued growth and diversification.

Speaker #4: So the lion's share is in the submarine and aircraft carrier. That's sole sourced and under Tina costs and pricing. And then the other up and comings we've seen the ability to differentiate and get higher margin.

Speaker #5: Great. Thanks for that elaboration. And on the aftermarket you know nice growth there. Healthy run rates I think above what it's averaged recently. So I'm curious if that's just kind of good concentration of activity in the period relative to the baseline or if you're starting to see a little you know you know bend upward in the traction of your strategic emphasis to build out the aftermarket.

Christopher Glynn: Great. Thanks for that elaboration. On the aftermarket, nice growth there, healthy run rates, I think above what it's averaged recently. I'm curious if that's just kind of good concentration of activity in the period relative to the baseline, or if you're starting to see a little bend upward in the traction of your strategic emphasis to build out the aftermarket.

Speaker #4: You know I would just really characterize it Chris as it continues to be strong. As you know Graham has over a billion dollar installed base across the globe and even though there you know the refiners and the OEMs aren't investing in large capital projects they are investing in the facilities and maintaining them and running them at peak capacity.

Chris J. Thome: I would just really characterize it, Chris, as it continues to be strong. As you know, Graham has over a billion-dollar installed base across the globe, and even though the refiners and the OEMs aren't investing in large capital projects, they are investing in the facilities and maintaining them and running them at peak capacity. We continue to see aftermarket strong. We expect it to continue. Our book-to-bill for aftermarket was 1.1 during the quarter. It was up, as you saw, 20% year over year. A lot of that growth, though, was driven by our defense aftermarket. We do still have some opportunity there as well on the defense side.

Chris Thome: I would just really characterize it, Chris, as it continues to be strong. As you know, Graham has over a billion-dollar installed base across the globe, and even though the refiners and the OEMs aren't investing in large capital projects, they are investing in the facilities and maintaining them and running them at peak capacity. We continue to see aftermarket strong. We expect it to continue. Our book-to-bill for aftermarket was 1.1 during the quarter. It was up, as you saw, 20% year over year. A lot of that growth, though, was driven by our defense aftermarket. We do still have some opportunity there as well on the defense side.

Speaker #4: So we continue to see aftermarket strong. We expect it to continue. Our book to bill for aftermarket was 1.1 during the quarter. And it was up as you saw 20% year over year.

Speaker #4: A lot of that growth though was driven by our defense aftermarket. So we do still have some opportunity there as well on the defense side.

Speaker #5: Yeah. And I just want to add one thing. I think it's important. About 96% utilization in refineries in North America. So a typical what is 75% to 96%.

Matt J. Malone: Yeah. I just want to add one thing. I think it's important. About 96% utilization in refineries in North America. Typical, what is 75% at 96%? These refineries are operating at capacity. What you see when that happens is two things. One is they're only doing maintenance when they must. With Graham's install base, we're well positioned to serve that. The second is they're only willing to take any downtime when there's pretty significant increases in either efficiency or utilization. Some of the programs that we're seeking there and have been winning and executing have been around on revamps, which is us providing improved performance within existing facilities. I would just characterize it as emergency aftermarket of our install base as well as improved efficiency. These facilities today, they're full speed ahead.

Matt Malone: Yeah. I just want to add one thing. I think it's important. About 96% utilization in refineries in North America. Typical, what is 75% at 96%? These refineries are operating at capacity. What you see when that happens is two things. One is they're only doing maintenance when they must. With Graham's install base, we're well positioned to serve that. The second is they're only willing to take any downtime when there's pretty significant increases in either efficiency or utilization. Some of the programs that we're seeking there and have been winning and executing have been around on revamps, which is us providing improved performance within existing facilities. I would just characterize it as emergency aftermarket of our install base as well as improved efficiency. These facilities today, they're full speed ahead.

Speaker #5: And so these refineries are operating at capacity. And what you see when that happens is two things. One is they're only doing maintenance when they must.

Speaker #5: And so with Graham's install base we're well positioned to serve that. The second is they're only willing to take any downtime when there's you know when there's pretty significant increases in either efficiency or utilization.

Speaker #5: And so some of the programs that we're seeking there and have been winning and executing have been around on rebounds which is us providing improved performance within existing facilities.

Speaker #5: So, I would just characterize it as emergency aftermarket of our install base as well as improved efficiency. But these facilities today, they're full speed ahead.

Speaker #5: Thanks for that description Matt. And last one from me I think for Chris. You know Chris anything if we start with a baseline of guidance.

Christopher Glynn: Last one from me, I think, for Chris. Chris, anything, if we start with a baseline of guidance, curious if there's anything cadence-wise we should consider across Q2 to Q4 versus, say, a prorating sort of thought through the quarters?

Speaker #5: Curious if there's anything cadence wise we should consider across two Q to four Q versus say you know a pro rating. Sort of thought through the quarters.

Speaker #4: Yeah. As you know our business tends to be cyclical and our fiscal third quarter due to the two holidays in that quarter. We are a direct labor driven business.

Chris J. Thome: Yeah. As you know, our business tends to be cyclical in our fiscal Q3 due to the two holidays in that quarter. We are a direct labor-driven business, so if our direct labor is off during the holidays, it does impact our revenue for the quarter. Between the three quarters, or actually the four quarters of the year, typically the Q3 is the lowest, but outside of that, there isn't much other cyclicality in our business.

Chris Thome: Yeah. As you know, our business tends to be cyclical in our fiscal Q3 due to the two holidays in that quarter. We are a direct labor-driven business, so if our direct labor is off during the holidays, it does impact our revenue for the quarter. Between the three quarters, or actually the four quarters of the year, typically the Q3 is the lowest, but outside of that, there isn't much other cyclicality in our business.

Speaker #4: So if direct if our direct labor is off during the holidays it does impact our revenue for the quarter. So between the three quarters you know we typically or actually the four quarters of the year you know typically the third quarter is the lowest.

Speaker #4: But outside of that, there isn't much other cyclicality in our business.

Speaker #5: Thanks. Appreciate the update guys.

Christopher Glynn: Thanks. Appreciate the update, guys.

Speaker #4: Thanks Chris.

Chris J. Thome: Thanks, Chris.

Chris Thome: Thanks, Chris.

Speaker #5: Our next question is from Robert Brooks with Northland Capital. Please go ahead.

Operator: Our next question is from Robert Brooks with Northland Capital. Please go ahead.

Speaker #6: Hey. Just wanted to jump back on. On the awards yesterday it kind of reading through it it seemed like they are an expansion of wallet share.

Robert Brooks: Hey, just wanted to jump back on. On the awards yesterday, it kind of, reading through it seems like they are an expansion of wallet share on the MK48s and the MK19s. Am I reading that right? Could you just help clarify my understanding there? It seems like you're expanding the wallet share, or is that more of a follow-on? Just trying to help me understand that better.

Speaker #6: On the MKK 48s and the MK19s, am I reading that right? Could you just help clarify my understanding there? Because it seems like you're expanding the wallet share, or is that more of a follow-on? Just trying to help me understand that better.

Speaker #5: Yep. So, simply put, Mark 48 is a sole-sourced award, and that is a follow-on. So, it's another option year, so that is not, you know, additional scope.

Matt J. Malone: Yep. Simply put, Mark 48 is a sole sourced award, and that is a follow-on, so it's another option year. That is not additional scope. It's actually just the incremental year. On the other program that we announced, that was a competitive solicitation, and it was a good win for the Barber-Nichols team. I'll keep it as sort of high level as that. It is an expansion of scope to support fleet maintenance and fleet spares.

Matt Malone: Yep. Simply put, Mark 48 is a sole sourced award, and that is a follow-on, so it's another option year. That is not additional scope. It's actually just the incremental year. On the other program that we announced, that was a competitive solicitation, and it was a good win for the Barber-Nichols team. I'll keep it as sort of high level as that. It is an expansion of scope to support fleet maintenance and fleet spares.

Speaker #5: It's actually just the incremental year. On the other program that we announced that was a competitive solicitation and it was a good win for the Barbara Nichols team.

Speaker #5: So I'll keep it as sort of high level as that. But it is an expansion of scope to support fleet maintenance and fleet spares.

Speaker #6: Got it. And maybe just sticking with the expansion of scope. Are there any particular like technologies that you're bringing to the table that you think can be that can drive expansion of scope on projects that you're currently serving?

Robert Brooks: Got it. Maybe just sticking with the expansion of scope, are there any particular technologies that you're bringing to the table that you think can drive expansion of scopes on projects that you're currently serving? Just wondering, maybe a good place to end there. Thanks.

Speaker #6: Just want to maybe a good place to end there. Thanks.

Speaker #5: Yeah. So I'll start with the one that often gets overlooked. Just execution period. Taking in work with the critical capabilities and you know welding that we have as well as rotating machines and we take in orders and we deliver on time.

Matt J. Malone: Yeah. I'll start with the one that often gets overlooked. Just execution, period. Taking in work with the critical capabilities and welding that we have, as well as rotating machines. We take in orders, and we deliver on time and on quality. When you do that, you get more work because as you read, the Navy does not have that currently with its supply chain. The other areas I mentioned, I'll just reiterate, we are seeing additional opportunity on the torpedo side and on the cooling for the radar and laser platforms.

Matt Malone: Yeah. I'll start with the one that often gets overlooked. Just execution, period. Taking in work with the critical capabilities and welding that we have, as well as rotating machines. We take in orders, and we deliver on time and on quality. When you do that, you get more work because as you read, the Navy does not have that currently with its supply chain. The other areas I mentioned, I'll just reiterate, we are seeing additional opportunity on the torpedo side and on the cooling for the radar and laser platforms.

Speaker #5: And on quality. And when you do that you get more work because as you read the Navy does not have that currently with its supply chain.

Speaker #5: The other areas I've mentioned I'll just reiterate we are seeing additional opportunity on the torpedo side. And on the cooling for the radar and laser platforms.

Speaker #6: Thank you very much.

Robert Brooks: Thank you very much.

Operator: We have reached the end of our question and answer session. I would now like to turn the floor back over to Matt Malone, CEO, for closing comments.

Speaker #5: We have reached the end of our question and answer session. I would now like to turn the floor back over to Matt Malone CEO for closing comments.

Speaker #7: Thank you Dylan. Overall we are pleased with our strong start to fiscal year 2027. With that said we recognize there is still significant work ahead.

Matt J. Malone: Thank you, Dylan. Overall, we are pleased with our strong start to fiscal year 2027. With that said, we recognize there is still significant work ahead. We will always focus on continued improvement. Our Q1 fiscal results represent another step forward for the objectives that we outlined at our Investor Day. We remain focused on disciplined execution, profitable growth, and getting better every day as we work towards becoming a top quartile performer and creating enduring value for our customers and shareholders. As always, please reach out with any questions. Thank you, everyone, for joining and your interest in Graham.

Matt Malone: Thank you, Dylan. Overall, we are pleased with our strong start to fiscal year 2027. With that said, we recognize there is still significant work ahead. We will always focus on continued improvement. Our Q1 fiscal results represent another step forward for the objectives that we outlined at our Investor Day. We remain focused on disciplined execution, profitable growth, and getting better every day as we work towards becoming a top quartile performer and creating enduring value for our customers and shareholders. As always, please reach out with any questions. Thank you, everyone, for joining and your interest in Graham.

Speaker #7: And we will always focus on continued improvement. Our first quarter fiscal results represent another step forward for the objectives that we outlined at our investor day.

Speaker #7: We remain focused on disciplined execution profitable growth and getting better every day as we work towards becoming a top quartile performer in creating enduring value for our customers and shareholders.

Speaker #7: As always please reach out with any questions. Thank you everyone for joining. And your interest in Graham.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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