Graham Corporation Reports Fourth Quarter and Full-Year Fiscal 2025 Results

Graham Corporation (GHM) reported strong Q4 2025 and fiscal year results, with revenue up 21% to $59.3 million and 13% to $209.9 million respectively, driven by growth in Defense and Space sectors. Gross margin expanded, leading to significant increases in net income and adjusted EBITDA; the company also reported a record backlog of $412.3 million and a book-to-bill ratio of 1.1x. Fiscal 2026 guidance projects revenue between $225 million and $235 million and adjusted EBITDA between $22 million and $28 million, while a management transition will see Matt Malone succeed Daniel J. Thoren as CEO, effective June 10, 2025.

Analysis

Graham Corporation (GHM) reported robust financial results for the fourth quarter and full fiscal year 2025, underscoring continued operational strength and demand primarily from its Defense and Space segments. Q4 FY25 revenue surged 21% year-over-year to $59.3 million, with gross margin expanding 110 basis points to 27.0% and operating margin reaching 9.3%, a significant improvement from 3.1% in the prior-year period. Full fiscal year 2025 revenue grew 13% to $209.9 million, driven by Defense projects and Space demand, including a $2.8 million contribution from the P3 Technologies acquisition. Fiscal 2025 gross margin expanded 330 basis points to 25.2%, and net income more than doubled to $12.2 million from $4.6 million in the prior fiscal year. Adjusted EBITDA for FY25 reached $22.4 million, or 10.7% of sales. The company achieved a book-to-bill ratio of 1.1x for FY25 and ended the year with a record backlog of $412.3 million, of which approximately 83% is attributable to the Defense industry, providing significant revenue visibility. Management initiated fiscal 2026 guidance with projected revenue of $225 million to $235 million (a 10% increase at the midpoint) and adjusted EBITDA of $22 million to $28 million (a 12% increase at the midpoint), even factoring in an estimated $2.0 million to $5.0 million impact from tariffs. Strategic investments in projects with an expected 20%+ ROIC, such as automated welding and facility expansions, are underway. A planned management transition will see Matt Malone become CEO, effective June 10, 2025, succeeding Daniel J. Thoren, who will become Executive Chairman.

Key Decisions for Investors

• Investors should note the strong revenue growth and margin expansion, particularly in the Defense and Space sectors, as key indicators of GHM's current performance and future potential.
• The record backlog of $412.3 million and a 1.1x book-to-bill ratio provide strong visibility into future revenues, though the concentration in Defense (83% of backlog) presents both stability and sector-specific risk.
• Consider the company's fiscal 2026 guidance, which projects continued growth despite anticipated tariff impacts, and monitor the execution of strategic capital projects aimed at enhancing margins and revenue.
• Evaluate the upcoming CEO transition and its potential impact on strategic direction and execution, while acknowledging the continuity provided by the outgoing CEO moving to an Executive Chairman role.