Graham Corporation (NYSE:GHM), a global business that designs,
manufactures and sells critical equipment for the oil refining,
petrochemical, power and defense industries, today reported its
financial results for its third quarter ended December 31,
2015. Graham’s current fiscal year (“fiscal 2016”) ends March
31, 2016.
Net sales in the third quarter of fiscal 2016 were $17.3
million, compared with net sales of $33.6 million in the third
quarter of the fiscal year ended March 31, 2015 (“fiscal
2015”). Third quarter fiscal 2016 sales were impacted by
weaker market conditions, as well as reduced production hours due
to engineering changes by customers. Net income in the third
quarter was $1.3 million, or $0.13 per diluted share, positively
impacted by income from cancellation fees. The prior year’s
third quarter had net income of $4.0 million, or $0.39 per diluted
share.
James R. Lines, Graham’s President and Chief Executive Officer,
commented, “Third quarter results were impacted by engineering
iterations between us and our customers that prevented certain
orders in backlog from entering production. This translated
into under absorption of overhead and the resulting deterioration
in gross profit and margin. We believe this was isolated to
the third quarter and expect improved backlog conversion in the
fourth quarter and into fiscal 2017.”
Third Quarter Sales Summary(See accompanying
tables for a breakdown of sales by industry and region)
As a result of weak backlog conversion, sales in the quarter
compared with prior year sales were down in all industries and to
all geographic regions. The steep sequential and comparable
period decline is expected to be isolated to the third quarter as
the subject projects are moving forward into production.
Sales to the U.S. market were $10.8 million, or 62% of
consolidated sales. Sales to markets outside of the U.S.
accounted for $6.5 million, or 38%.
Fluctuations in Graham’s sales among geographic locations and
industries can vary measurably from quarter-to-quarter based on the
timing and magnitude of projects. Graham does not believe
that such quarter-to-quarter fluctuations are indicative of
business trends, which it believes are more apparent on a trailing
twelve month basis.
Third Quarter Fiscal 2016 Operating
Performance
Gross profit in the third quarter was $3.5 million, or 20% of
sales, compared with $10.1 million, or 30% of sales, in the same
period of the prior fiscal year. Fiscal 2016’s third quarter
gross profit and margin were impacted by lower revenue, reduced
overall volume in production as a result of weak fundamentals in
the refining and chemical industries and the resultant under
absorption of overhead.
Selling, general and administrative (“SG&A”) expenses were
$3.7 million in the third quarter, down 17% from $4.5 million in
the same prior-year period due to lower volume-driven expenses as
well as the cost reductions related to the restructuring activity
that occurred at the end of fiscal 2015. SG&A as a
percent of sales was 22% in the third quarter of fiscal 2016
compared with 13% in the same prior-year period.
Cancellation charges of $1.8 million reflected in other pre-tax
income in the fiscal 2016 third quarter were negotiated and settled
with customers for two contracts.
Earnings before interest, taxes, depreciation, and amortization
(“EBITDA”) were $2.2 million in the third quarter, compared with
$6.2 million in the same prior-year period. EBITDA margin in
the third quarter was 13% of sales compared with 18% in the
prior-year period. Graham believes that when used in
conjunction with measures prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”), EBITDA, which is
a non-GAAP measure, helps in the understanding of its operating
performance. Graham’s credit facility also contains ratios
based on EBITDA. See the attached tables for additional
important disclosures regarding Graham’s use of EBITDA as well as a
reconciliation of net income to EBITDA.
Graham’s effective tax rate for the third quarter of fiscal 2016
was 22%, compared with 30% for the same prior-year period.
The fiscal 2016 period was favorably impacted by the U.S.
government’s retroactive reinstatement of the federal research and
development tax credit during the Company’s fiscal third
quarter.
Review of First Nine Months of Fiscal 2016
Net sales were $67.7 million, compared with $97.7 million in the
first nine months of fiscal 2015, reflective of weak fundamentals
in the refining and chemical industries. International sales
were $24.0 million and represented 35% of total sales compared with
$35.3 million, or 36% of sales, in the prior-year period.
Sales to the U.S. were $43.7 million, or 65% of net sales compared
with $62.4 million, or 64% of net sales for the first nine months
of fiscal 2015.
Gross profit was down $10.3 million to $18.7 million, compared
with the prior-year period, as a result of lower volume.
Gross margin was 28% for the fiscal 2016 year-to-date period
compared with 30% in the prior-year period. SG&A was
$12.6 million, down 7%, or $1.0 million due to lower volume-driven
expenses, as well as cost reductions related to restructuring
activity in fiscal 2015. As a percent of sales, SG&A was
up to 19% compared with 14% in the prior-year period, reflective of
lower sales volume.
Other income was $1.8 million in the fiscal 2016 year-to-date
period due to the third quarter cancellation charges described
above.
EBITDA was $9.7 million, compared with $17.2 million in the
prior-year period. As a percent of sales, EBITDA was 14%
compared with 18% in the prior year, reflecting the impact of
volume and under absorbed overhead. See the attached tables
for additional important disclosures regarding Graham’s use of
EBITDA as well as a reconciliation of net income to EBITDA.
Net income was $5.6 million, or $0.56 per diluted share,
compared with net income of $10.6 million, or $1.04 per
diluted share, in the first nine months of fiscal 2015.
Strong Cash Generation Exceeds Measurable Capital Return
to Shareholders; Enables Financial Flexibility for
Acquisitions
Cash, cash equivalents and investments at December 31, 2015
increased $12.9 million to $73.2 million, compared with ending
balances at March 31, 2015.
Cash provided by operations in the third quarter and first nine
months of fiscal 2016 was $14.5 million and $22.2 million,
respectively, compared with cash used by operations of $1 million
and cash provided by operations of $7.5 million in the third
quarter and first nine months of fiscal 2015, respectively.
Strong cash provided by operations in the third quarter was due to
strong customer collections.
Capital expenditures were $0.9 million in the first nine months
of fiscal 2016, compared with $5 million in the same prior-year
period. The majority of the prior year’s spending was for the
capacity expansion of the Company’s Batavia, New York facility
completed in the first half of fiscal 2015. The Company
expects capital expenditures for fiscal 2016 to be between $1.5
million and $2 million, primarily for equipment upgrades and
productivity enhancements.
Graham had neither borrowings under its credit facility, nor any
long-term debt outstanding, at December 31, 2015.
Jeffrey Glajch, Graham’s Chief Financial Officer, commented,
“Strong customer collections drove our cash flow from operations in
the third quarter. So far this year, our cash balance grew
$12.9 million even after paying $2.4 million in dividends,
repurchasing $5.9 million of our shares and investing $0.9 million
in capital expenditures. The strength of our operations, even
as the energy industry is under duress, enables us to return $8.3
million to shareholders while also building our cash reserves to
support organic and acquisition growth.”
Backlog Indicative of Long-term Stability
Orders during the third quarter of fiscal 2016 were $22.3
million, net of a $3.3 million cancellation from backlog,
relatively unchanged from the prior-year period. Gross orders
were $25.6 million. Orders from the power and
chemical/petrochemical markets were up $5.3 million and $1.3
million, respectively. Net of the $3.3 million cancelled
order, refining market orders were down $3.1 million compared with
the prior-year quarter. Other commercial and industrial
orders were down $3.8 million. When compared with the
trailing second quarter of fiscal 2016, orders increased $1.7
million, or 8%. There was one order on hold as of December
31, 2015, valued at $10.1 million.
Orders from U.S. customers were $9.5 million, net of the $3.3
million cancelled order, representing 42% of total orders received
during the third quarter of fiscal 2016. Orders from
international markets accounted for $12.8 million.
Graham expects that the balance between domestic and
international orders will continue to be variable between quarters,
but that in the long run orders will be relatively balanced between
these geographic markets.
The Company’s backlog grew sequentially to $113.2 million at
December 31, 2015, compared with $108.1 million at September 30,
2015, and $113.8 million at March 31, 2015. Approximately 24%
of backlog was for refinery projects, 13% was for chemical and
petrochemical projects and 15% was for power projects, including
nuclear. Approximately 44% of backlog was for U.S. Navy
projects and 4% was for other industrial or commercial
applications.
Approximately 45% to 50% of orders currently in backlog are
expected to be converted to sales within the next 12 months,
approximately 5% to 10% are expected to be converted between the
next 12 to 24 months, and approximately 40% to 45% are expected to
be converted beyond 24 months.
Fiscal 2016 Revenue Guidance Reduced and Range
Tightened, Gross Margin Unchanged
The Company expects fiscal 2016 revenue to be between $90
million and $95 million, down from a previous range of $95 million
to $105 million, as a result of lower revenue in the third
quarter. Gross margin for fiscal 2016 is still expected to be
between 27% and 28% and the guidance on SG&A expense as a
percent of sales is unchanged at between 17% and 18%. Graham
has lowered its fiscal 2016 full year tax rate to be between 30%
and 31%.
Mr. Lines concluded, “We reduced our fiscal 2016 revenue
guidance to reflect the impact of the third quarter’s low revenue
level. While this suggests a substantial increase in
sequential revenue for our fourth quarter, due to backlog
conversion timing it is not possible to recover fully from our
third quarter results. Although we continue to experience
uncertainty in the oil refining and chemical markets, we remain
confident in our strategy to grow. Diversification into the
nuclear power and U.S. Naval markets, prospective acquisitions and
the long-term growth expectations for the oil and chemical
industries provide the basis for our continued investment in
Graham, even through this market contraction.”
Webcast and Conference Call Graham management
will host a conference call and live webcast today at 11:00 a.m.
Eastern Time to review Graham’s financial condition and operating
results for its third quarter and first nine months of fiscal 2016,
as well as its strategy and outlook. The review will be
accompanied by a slide presentation which will be made available
immediately prior to the conference call on Graham’s website at
www.graham-mfg.com under the heading “Investor Relations.” A
question-and-answer session will follow the formal
presentation.
Graham’s conference call can be accessed by calling (201)
689-8560. Alternatively, the webcast can be monitored on
Graham’s website at www.graham-mfg.com under the heading “Investor
Relations.”
A telephonic replay will be available from approximately 2:00
p.m. Eastern Time on the day of the call through Friday, February
5, 2016. To listen to the archived call, dial (858) 384-5517,
and enter conference ID number 13627608. A transcript of the
call will be placed on Graham’s website, once available.
ABOUT GRAHAM CORPORATION
Graham is a global business that designs, manufactures and sells
critical equipment for the energy, defense and
chemical/petrochemical industries. Energy markets include oil
refining, cogeneration, nuclear and alternative power. For
the defense industry, the Company’s equipment is used in nuclear
propulsion power systems for the U.S. Navy. Graham’s global
brand is built upon world-renowned engineering expertise in vacuum
and heat transfer technology, responsive and flexible service and
unsurpassed quality. Graham designs and manufactures
custom-engineered ejectors, vacuum pumping systems, surface
condensers and vacuum systems. Graham is also a leading
nuclear code accredited fabrication and specialty machining
company. Graham supplies components used inside reactor
vessels and outside containment vessels of nuclear power
facilities. Graham’s equipment can also be found in other
diverse applications such as metal refining, pulp and paper
processing, water heating, refrigeration, desalination, food
processing, pharmaceutical, heating, ventilating and air
conditioning. Graham’s reach spans the globe and its
equipment is installed in facilities from North and South America
to Europe, Asia, Africa and the Middle East. Graham routinely
posts news and other important information on its website,
www.graham-mfg.com, where additional comprehensive information on
Graham Corporation and its subsidiaries can be found.
Safe Harbor Regarding Forward Looking
Statements This news release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended.
Forward-looking statements are subject to risks, uncertainties
and assumptions and are identified by words such as “expects,”
“estimates,” “confidence,” “projects,” “typically,” “outlook,”
“anticipates,” “believes,” “appears,” “could,” “opportunities,”
“seeking,” “plans,” “aim,” “pursuit,” and other similar
words. All statements addressing operating performance,
events, or developments that Graham Corporation expects or
anticipates will occur in the future, including but not limited to,
expected expansion and growth opportunities within the domestic and
international markets, anticipated revenue, the timing of
conversion of backlog to sales, market presence, profit margins,
tax rates, foreign sales operations, its ability to improve cost
competitiveness, customer preferences, changes in market conditions
in the industries in which it operates, changes in commodities
prices, the effect on its business of volatility in commodities
prices, changes in general economic conditions and customer
behavior, forecasts regarding the timing and scope of the economic
recovery in its markets, its acquisition and growth strategy and
the expected performance of Energy Steel & Supply Co, are
forward-looking statements. Because they are forward-looking,
they should be evaluated in light of important risk factors and
uncertainties. These risk factors and uncertainties are more fully
described in Graham Corporation's most recent Annual Report filed
with the Securities and Exchange Commission, included under the
heading entitled “Risk Factors.”
Should one or more of these risks or uncertainties materialize,
or should any of Graham Corporation's underlying assumptions prove
incorrect, actual results may vary materially from those currently
anticipated. In addition, undue reliance should not be placed
on Graham Corporation's forward-looking statements. Except as
required by law, Graham Corporation disclaims any obligation to
update or publicly announce any revisions to any of the
forward-looking statements contained in this news release.
FINANCIAL TABLES FOLLOW.
|
Graham Corporation Third Quarter Fiscal
2016 |
Consolidated Statements of
Operations—Unaudited |
(Amounts in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
December
31, |
|
December
31, |
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
% Change |
|
|
2015 |
|
|
|
2014 |
|
% Change |
Net
sales |
$ |
17,323 |
|
|
$ |
33,646 |
|
|
(49 |
%) |
|
$ |
67,738 |
|
|
$ |
97,714 |
|
|
(31 |
%) |
Cost of products sold |
|
13,799 |
|
|
|
23,543 |
|
|
(41 |
%) |
|
|
49,042 |
|
|
|
68,695 |
|
|
(29 |
%) |
Gross profit |
|
3,524 |
|
|
|
10,103 |
|
|
(65 |
%) |
|
|
18,696 |
|
|
|
29,019 |
|
|
(36 |
%) |
Gross profit margin |
|
20.3 |
% |
|
|
30.0 |
% |
|
|
|
27.6 |
% |
|
|
29.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Other expenses and
income: |
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
3,680 |
|
|
|
4,424 |
|
|
(17 |
%) |
|
|
12,447 |
|
|
|
13,413 |
|
|
(7 |
%) |
Selling, general and administrative
– amortization |
|
58 |
|
|
|
59 |
|
|
(2 |
%) |
|
|
175 |
|
|
|
171 |
|
|
2 |
% |
|
|
3,738 |
|
|
|
4,483 |
|
|
(17 |
%) |
|
|
12,622 |
|
|
|
13,584 |
|
|
(7 |
%) |
Other income |
|
(1,784 |
) |
|
|
- |
|
|
|
|
(1,784 |
) |
|
|
- |
|
|
Operating
profit |
|
1,570 |
|
|
|
5,620 |
|
|
(72 |
%) |
|
|
7,858 |
|
|
|
15,435 |
|
|
(49 |
%) |
Operating profit margin |
|
9.1 |
% |
|
|
16.7 |
% |
|
|
|
11.6 |
% |
|
|
15.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
(72 |
) |
|
|
(50 |
) |
|
44 |
% |
|
|
(177 |
) |
|
|
(139 |
) |
|
27 |
% |
Interest expense |
|
4 |
|
|
|
2 |
|
|
100 |
% |
|
|
8 |
|
|
|
8 |
|
|
0 |
% |
Income before provision
for income taxes |
|
1,638 |
|
|
|
5,668 |
|
|
(71 |
%) |
|
|
8,027 |
|
|
|
15,566 |
|
|
(48 |
%) |
Provision for income
taxes |
|
364 |
|
|
|
1,676 |
|
|
(78 |
%) |
|
|
2,416 |
|
|
|
4,996 |
|
|
(52 |
%) |
Net
income |
$ |
1,274 |
|
|
$ |
3,992 |
|
|
(68 |
%) |
|
$ |
5,611 |
|
|
$ |
10,570 |
|
|
(47 |
%) |
|
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
Net income |
$ |
0.13 |
|
|
$ |
0.39 |
|
|
(67 |
%) |
|
$ |
0.56 |
|
|
$ |
1.04 |
|
|
(46 |
%) |
Diluted: |
|
|
|
|
|
|
|
|
|
Net income |
$ |
0.13 |
|
|
$ |
0.39 |
|
|
(67 |
%) |
|
$ |
0.56 |
|
|
$ |
1.04 |
|
|
(46 |
%) |
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
9,922 |
|
|
|
10,127 |
|
|
|
|
10,051 |
|
|
|
10,119 |
|
|
Diluted |
|
9,927 |
|
|
|
10,149 |
|
|
|
|
10,059 |
|
|
|
10,142 |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
$ |
0.08 |
|
|
$ |
0.04 |
|
|
|
$ |
0.24 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
Graham Corporation Third Quarter Fiscal
2016 |
|
Consolidated Balance
Sheets—Unaudited |
|
(Amounts in thousands, except per share data) |
|
|
|
|
|
|
|
December 31, |
|
March 31, |
|
|
|
2015 |
|
|
|
2015 |
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash
equivalents |
$ |
31,215 |
|
|
$ |
27,271 |
|
|
Investments |
|
42,000 |
|
|
|
33,000 |
|
|
Trade accounts receivable, net of
allowances ($76 and $62 at |
|
|
|
|
December 31 and March 31, 2015,
respectively) |
|
10,860 |
|
|
|
17,249 |
|
|
Unbilled revenue |
|
8,454 |
|
|
|
18,665 |
|
|
Inventories |
|
11,803 |
|
|
|
13,994 |
|
|
Prepaid expenses and other current
assets |
|
866 |
|
|
|
529 |
|
|
Income taxes receivable |
|
2,871 |
|
|
|
339 |
|
|
Total current assets |
|
108,069 |
|
|
|
111,047 |
|
|
Property, plant and
equipment, net |
|
18,975 |
|
|
|
19,812 |
|
|
Prepaid pension
asset |
|
2,248 |
|
|
|
1,332 |
|
|
Goodwill |
|
6,938 |
|
|
|
6,938 |
|
|
Permits |
|
10,300 |
|
|
|
10,300 |
|
|
Other intangible
assets, net |
|
4,293 |
|
|
|
4,428 |
|
|
Other assets |
|
186 |
|
|
|
146 |
|
|
Total
assets |
$ |
151,009 |
|
|
$ |
154,003 |
|
|
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Current portion of capital lease
obligations |
$ |
55 |
|
|
$ |
60 |
|
|
Accounts payable |
|
10,909 |
|
|
|
13,334 |
|
|
Accrued compensation |
|
5,500 |
|
|
|
9,343 |
|
|
Accrued expenses and other current
liabilities |
|
3,153 |
|
|
|
3,247 |
|
|
Customer deposits |
|
8,120 |
|
|
|
4,179 |
|
|
Total current
liabilities |
|
27,737 |
|
|
|
30,163 |
|
|
Capital lease
obligations |
|
174 |
|
|
|
98 |
|
|
Accrued
compensation |
|
- |
|
|
|
124 |
|
|
Deferred income tax
liability |
|
6,784 |
|
|
|
5,876 |
|
|
Accrued pension
liability |
|
353 |
|
|
|
315 |
|
|
Accrued postretirement
benefits |
|
895 |
|
|
|
876 |
|
|
Total
liabilities |
|
35,943 |
|
|
|
37,452 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Preferred stock, $1.00 par value,
500 shares authorized |
|
- |
|
|
|
- |
|
|
Common stock, $.10 par value,
25,500 shares authorized |
|
|
|
|
10,468 and 10,432 shares issued and
9,848 and 10,133 shares outstanding |
|
1,047 |
|
|
|
1,043 |
|
|
Capital in excess of par
value |
|
22,101 |
|
|
|
21,398 |
|
|
Retained earnings |
|
109,374 |
|
|
|
106,178 |
|
|
Accumulated other comprehensive
loss |
|
(8,651 |
) |
|
|
(9,056 |
) |
|
Treasury stock, (620 and 299
shares) |
|
(8,805 |
) |
|
|
(3,012 |
) |
|
Total stockholders’
equity |
|
115,066 |
|
|
|
116,551 |
|
|
Total liabilities and
stockholders’ equity |
$ |
151,009 |
|
|
$ |
154,003 |
|
|
|
|
|
|
|
Graham Corporation Third Quarter Fiscal
2016 |
|
Consolidated Statements of Cash
Flows—Unaudited |
|
(Amounts in thousands) |
|
|
|
|
|
Nine Months Ended December
31, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
Operating
activities: |
|
|
|
|
|
Net income |
|
$ |
5,611 |
|
|
$ |
10,570 |
|
|
Adjustments to reconcile net income
to net cash provided by operating activities: |
|
|
|
|
|
Depreciation |
|
|
1,675 |
|
|
|
1,561 |
|
|
Amortization |
|
|
175 |
|
|
|
171 |
|
|
Amortization of unrecognized prior
service cost and actuarial losses |
|
|
911 |
|
|
|
389 |
|
|
(Gain) loss on disposal of
property, plant and equipment |
|
|
(1 |
) |
|
|
3 |
|
|
Stock-based compensation
expense |
|
|
540 |
|
|
|
481 |
|
|
Deferred income taxes |
|
|
596 |
|
|
|
(281 |
) |
|
(Increase) decrease in operating
assets: |
|
|
|
|
|
Accounts receivable |
|
|
6,329 |
|
|
|
(4,938 |
) |
|
Unbilled revenue |
|
|
10,152 |
|
|
|
(5,463 |
) |
|
Inventories |
|
|
2,186 |
|
|
|
1,887 |
|
|
Prepaid expenses and other current
and non-current assets |
|
|
(420 |
) |
|
|
(430 |
) |
|
Prepaid pension asset |
|
|
(917 |
) |
|
|
(845 |
) |
|
Increase (decrease) in operating
liabilities: |
|
|
|
|
|
Accounts payable |
|
|
(2,216 |
) |
|
|
2,584 |
|
|
Accrued compensation, accrued
expenses and other current and non-current liabilities |
|
|
(3,795 |
) |
|
|
2,138 |
|
|
Customer deposits |
|
|
3,944 |
|
|
|
(964 |
) |
|
Income taxes
payable/receivable |
|
|
(2,531 |
) |
|
|
743 |
|
|
Long-term portion of accrued
compensation, accrued pension liability and accrued
postretirement benefits |
|
|
(68 |
) |
|
|
(101 |
) |
|
Net cash provided by
operating activities |
|
|
22,171 |
|
|
|
7,505 |
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
Purchase of property, plant and
equipment |
|
|
(883 |
) |
|
|
(4,965 |
) |
|
Proceeds from disposal of property,
plant and equipment |
|
|
4 |
|
|
|
1 |
|
|
Purchase of investments |
|
|
(36,000 |
) |
|
|
(41,000 |
) |
|
Redemption of investments at
maturity |
|
|
27,000 |
|
|
|
37,000 |
|
|
Net cash used by investing
activities |
|
|
(9,879 |
) |
|
|
(8,964 |
) |
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
Principal repayments on capital
lease obligations |
|
|
(42 |
) |
|
|
(64 |
) |
|
Issuance of common stock |
|
|
97 |
|
|
|
48 |
|
|
Dividends paid |
|
|
(2,415 |
) |
|
|
(1,215 |
) |
|
Purchase of treasury stock |
|
|
(5,852 |
) |
|
|
- |
|
|
Excess tax benefit on stock
awards |
|
|
5 |
|
|
|
37 |
|
|
Net cash used by financing
activities |
|
|
(8,207 |
) |
|
|
(1,194 |
) |
|
Effect of exchange rate changes on
cash |
|
|
(141 |
) |
|
|
3 |
|
|
Net increase (decrease) in cash and
cash equivalents |
|
|
3,944 |
|
|
|
(2,650 |
) |
|
Cash and cash equivalents at
beginning of year |
|
|
27,271 |
|
|
|
32,146 |
|
|
Cash and cash equivalents at end of
period |
|
$ |
31,215 |
|
|
$ |
29,496 |
|
|
|
|
|
|
|
|
Graham Corporation Third Quarter Fiscal
2016 |
EBITDA Reconciliation—Unaudited |
(Amounts in thousands) |
|
|
Three Months Ended |
|
Nine Months Ended |
|
December 31, |
|
December 31, |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
Net
income |
$ |
1,274 |
|
|
$ |
3,992 |
|
|
$ |
5,611 |
|
|
$ |
10,570 |
|
+Net interest income |
|
(68 |
) |
|
|
(48 |
) |
|
|
(169 |
) |
|
|
(131 |
) |
+Income taxes |
|
364 |
|
|
|
1,676 |
|
|
|
2,416 |
|
|
|
4,996 |
|
+Depreciation &
amortization |
|
607 |
|
|
|
579 |
|
|
|
1,850 |
|
|
|
1,732 |
|
EBITDA |
$ |
2,177 |
|
|
$ |
6,199 |
|
|
$ |
9,708 |
|
|
$ |
17,167 |
|
EBITDA margin % |
|
12.6 |
% |
|
|
18.4 |
% |
|
|
14.3 |
% |
|
|
17.6 |
% |
|
|
|
|
|
|
|
|
Non-GAAP Financial Measure:
EBITDA is defined as consolidated net income before interest
expense and income, income taxes, depreciation and
amortization. EBITDA is not a measure determined in
accordance with generally accepted accounting principles in the
United States, commonly known as GAAP. Nevertheless, Graham
believes that providing non-GAAP information such as EBITDA is
important for investors and other readers of Graham's financial
statements, as it is used as an analytical indicator by Graham's
management to better understand operating performance.
Graham’s credit facility also contains ratios based on
EBITDA. Because EBITDA is a non-GAAP measure and is thus
susceptible to varying calculations, EBITDA, as presented, may not
be directly comparable to other similarly titled measures used by
other companies.
|
|
|
|
Graham Corporation Third Quarter Fiscal
2016 |
|
|
Additional Information—Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORDER & BACKLOG TREND |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q115 |
Q215 |
Q315 |
Q415 |
FY2015 |
Q116 |
Q216 |
Q316 |
|
|
|
|
|
6/30/14 |
9/30/14 |
12/31/14 |
3/31/15 |
Total |
Total |
Total |
Total |
|
|
|
|
Orders |
$ |
31.1 |
|
$ |
35.4 |
|
$ |
22.6 |
|
$ |
47.4 |
|
$ |
136.5 |
|
$ |
24.0 |
|
$ |
20.6 |
|
$ |
22.3 |
|
|
|
|
|
Backlog |
$ |
114.8 |
|
$ |
114.8 |
|
$ |
103.8 |
|
$ |
113.8 |
|
$ |
113.8 |
|
$ |
110.1 |
|
$ |
108.1 |
|
$ |
113.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES BY INDUSTRY FY 2016 |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2016 |
Q1 |
% of |
Q2 |
% of |
Q3 |
% of |
|
|
|
|
|
|
|
6/30/15 |
Total |
9/30/15 |
Total |
12/31/15 |
Total |
|
|
|
|
|
|
Refining |
$ |
7.8 |
|
|
28 |
% |
$ |
7.2 |
|
|
32 |
% |
$ |
6.2 |
|
|
36 |
% |
|
|
|
|
|
|
Chemical/ Petrochemical |
$ |
11.3 |
|
|
41 |
% |
$ |
7.3 |
|
|
32 |
% |
$ |
4.8 |
|
|
28 |
% |
|
|
|
|
|
|
Power |
$ |
3.7 |
|
|
13 |
% |
$ |
3.0 |
|
|
13 |
% |
$ |
2.7 |
|
|
16 |
% |
|
|
|
|
|
|
Other Commercial and Industrial* |
$ |
4.8 |
|
|
18 |
% |
$ |
5.3 |
|
|
23 |
% |
$ |
3.6 |
|
|
20 |
% |
|
|
|
|
|
|
Total |
$ |
27.6 |
|
|
$ |
22.8 |
|
|
$ |
17.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES BY INDUSTRY FY 2015 |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2015 |
Q1 |
% of |
Q2 |
% of |
Q3 |
% of |
Q4 |
% of |
FY2015 |
% of |
|
|
|
6/30/14 |
Total |
9/30/14 |
Total |
12/31/14 |
Total |
3/31/15 |
Total |
|
Total |
|
|
Refining |
$ |
6.6 |
|
|
23 |
% |
$ |
12.3 |
|
|
35 |
% |
$ |
12.8 |
|
|
38 |
% |
$ |
11.8 |
|
|
32 |
% |
$ |
43.5 |
|
|
32 |
% |
|
|
Chemical/ Petrochemical |
$ |
11.7 |
|
|
41 |
% |
$ |
12.9 |
|
|
36 |
% |
$ |
9.4 |
|
|
28 |
% |
$ |
13.5 |
|
|
36 |
% |
$ |
47.5 |
|
|
35 |
% |
|
|
Power |
$ |
4.9 |
|
|
17 |
% |
$ |
5.6 |
|
|
16 |
% |
$ |
5.5 |
|
|
16 |
% |
$ |
3.5 |
|
|
9 |
% |
$ |
19.5 |
|
|
15 |
% |
|
|
Other Commercial and Industrial* |
$ |
5.3 |
|
|
19 |
% |
$ |
4.8 |
|
|
13 |
% |
$ |
5.9 |
|
|
18 |
% |
$ |
8.7 |
|
|
23 |
% |
$ |
24.7 |
|
|
18 |
% |
|
|
Total |
$ |
28.5 |
|
|
$ |
35.6 |
|
|
$ |
33.6 |
|
|
$ |
37.5 |
|
|
$ |
135.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Includes
the defense industry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES BY REGION FY 2016 |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2016 |
Q1 |
% of |
Q2 |
% of |
Q3 |
% of |
|
|
|
|
|
|
|
6/30/15 |
Total |
9/30/15 |
Total |
12/31/15 |
Total |
|
|
|
|
|
|
United States |
$ |
17.6 |
|
|
64 |
% |
$ |
15.2 |
|
|
67 |
% |
$ |
10.8 |
|
|
62 |
% |
|
|
|
|
|
|
Middle East |
$ |
3.3 |
|
|
12 |
% |
$ |
3.8 |
|
|
17 |
% |
$ |
1.7 |
|
|
10 |
% |
|
|
|
|
|
|
Asia |
$ |
2.9 |
|
|
11 |
% |
$ |
0.8 |
|
|
3 |
% |
$ |
1.6 |
|
|
9 |
% |
|
|
|
|
|
|
Other |
$ |
3.8 |
|
|
13 |
% |
$ |
3.0 |
|
|
13 |
% |
$ |
3.2 |
|
|
19 |
% |
|
|
|
|
|
|
Total |
$ |
27.6 |
|
|
$ |
22.8 |
|
|
$ |
17.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES BY REGION FY 2015 |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2015 |
Q1 |
% of |
Q2 |
% of |
Q3 |
% of |
Q4 |
% of |
FY2015 |
% of |
|
|
|
6/30/14 |
Total |
9/30/14 |
Total |
12/31/14 |
Total |
3/31/15 |
Total |
|
Total |
|
|
United States |
$ |
22.2 |
|
|
78 |
% |
$ |
21.9 |
|
|
61 |
% |
$ |
18.3 |
|
|
55 |
% |
$ |
24.0 |
|
|
64 |
% |
$ |
86.4 |
|
|
64 |
% |
|
|
Middle East |
$ |
1.5 |
|
|
5 |
% |
$ |
2.0 |
|
|
6 |
% |
$ |
2.1 |
|
|
6 |
% |
$ |
4.6 |
|
|
12 |
% |
$ |
10.2 |
|
|
8 |
% |
|
|
Asia |
$ |
2.4 |
|
|
8 |
% |
$ |
3.5 |
|
|
10 |
% |
$ |
2.2 |
|
|
7 |
% |
$ |
3.1 |
|
|
8 |
% |
$ |
11.2 |
|
|
8 |
% |
|
|
Other |
$ |
2.4 |
|
|
9 |
% |
$ |
8.2 |
|
|
23 |
% |
$ |
11.0 |
|
|
32 |
% |
$ |
5.8 |
|
|
16 |
% |
$ |
27.4 |
|
|
20 |
% |
|
|
Total |
$ |
28.5 |
|
|
$ |
35.6 |
|
|
$ |
33.6 |
|
|
$ |
37.5 |
|
|
$ |
135.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For more information contact:
Jeffrey F. Glajch
Vice President - Finance and CFO
Phone: (585) 343-2216
jglajch@graham-mfg.com
Deborah K. Pawlowski / Karen L. Howard
Kei Advisors LLC
Phone: (716) 843-3908 / (716) 843-3942
dpawlowski@keiadvisors.com / khoward@keiadvisors.com
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