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 fourth quarter and fiscal year ended
March 31, 2016 (“fiscal 2016”).
Net sales in the fourth quarter of fiscal 2016 were $22.3
million, compared with net sales of $37.5 million in the fourth
quarter of the fiscal year ended March 31, 2015 (“fiscal
2015”). Similar to earlier fiscal 2016 quarters, fourth
quarter sales were impacted by weak market conditions. Net
income in the fourth quarter was $0.5 million, or $0.05 per diluted
share. The prior year’s fourth quarter had net income of $4.2
million, or $0.41 per diluted share.
Net sales for the full-year fiscal 2016 were $90.0 million, a
decrease of 33% from $135.2 million in fiscal 2015. Fiscal
2016 net income was $6.1 million, or $0.61 per diluted share,
compared with net income of $14.7 million, or $1.45 per diluted
share, in fiscal 2015.
James R. Lines, Graham’s President and Chief Executive Officer,
commented, “The dramatic decline in crude oil prices over the past
12 to 18 months presented significant challenges to our
business. The impact on Graham is evidenced by year-over-year
revenue and order declines from last year’s record levels, as well
as lower earnings. Despite this difficult operating
environment, I believe that Graham today is a stronger, more
diverse and better performing company than in past downturns.
This is due, in large part, to actions we have taken both to change
how we operate in the cyclical markets that we serve and to grow
our revenue opportunities in more non-cyclical markets. These
actions enabled us, in fiscal 2016, to maintain profitability and
strong cash flows from operations, while allowing us to remain
committed to our long-term growth strategies.”
Fourth Quarter Sales Summary(See accompanying
tables for a breakdown of sales by industry and region)
Sales to the power market were up 49%, to $5.2 million, while
sales to all other markets were down compared with the prior year
fourth quarter. Graham believes that the improvement in the
power market sales demonstrates the effectiveness of its
diversification strategy. From a geographic perspective,
sales to most markets were down compared with the prior-year fourth
quarter. Sales to the U.S. market were $13.4 million, or 60%
of consolidated fourth quarter sales in fiscal 2016. Sales to
markets outside of the U.S. accounted for $8.9 million, or
40%.
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.
Fourth Quarter Fiscal 2016 Operating
Performance
Gross profit in the fourth quarter was $4.6 million, or 20% of
sales, compared with $12.8 million, or 34% of sales, in the same
period of the prior fiscal year. Fourth quarter gross profit
and margin were impacted by lower revenue and production volume
causing under-absorption of overhead, personnel investments for
commercial nuclear and naval strategies, and the impact of lower
margin orders from backlog.
Selling, general and administrative (“SG&A”) expenses were
$3.9 million in the fourth quarter, down 20% from $4.9 million in
the same prior-year period. This decrease was principally due to
lower variable expenses, including compensation, as well as cost
reductions stemming from the restructuring activity that occurred
at the end of fiscal 2015. SG&A as a percent of sales was
18% in the fourth quarter of fiscal 2016 compared with 13% in the
same prior-year period.
The fourth quarter of the prior year included a $1.7 million
restructuring charge, primarily for severance costs related largely
to a voluntary early retirement program.
Fourth quarter net income was $0.5 million, compared with net
income of $4.2 million in the prior-year fourth quarter.
Consolidated net income before interest expense and income, income
taxes, depreciation and amortization and a nonrecurring
restructuring charge (“Adjusted EBITDA”) was $1.2 million in the
fourth quarter, compared with $8.4 million in the same prior-year
period. Adjusted EBITDA margin, which refers to Adjusted
EBITDA as a percentage of sales, in the fourth quarter was 5%
compared with 23% 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”),
Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP
measures, help 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 Adjusted EBITDA and
Adjusted EBITDA margin as well as a reconciliation of net income to
Adjusted EBITDA.
Graham’s effective tax rate for the fourth quarter of fiscal
2016 was 26% compared with 33% for the same prior-year
period.
Full Year Fiscal 2016 Review
Net sales of $90.0 million in fiscal 2016 reflected weak
fundamentals in the refining and chemical industries
globally. International sales were $33.0 million and
represented 37% of total sales compared with $48.8 million, or 36%
of sales, in the prior-year period. Sales to the U.S. were
$57.0 million, or 63% of net sales, compared with $86.4 million, or
64% of net sales, for fiscal 2015.
Gross profit was down $18.5 million to $23.3 million, compared
with the prior-year period, primarily as a result of lower volume
and also due to personnel investments to support the Company’s
commercial nuclear and naval strategies. Gross margin was 26%
for fiscal 2016 compared with 31% in the prior year. SG&A
was $16.6 million, down 11%, or $1.9 million, principally due to
lower variable expenses, including compensation, as well as cost
reductions resulting from the restructuring activity in fiscal
2015. As a percent of sales, SG&A was 18% compared with
14% in the prior year, reflecting lower sales volume.
As noted above, the prior year included a $1.7 million
restructuring charge primarily for severance costs related largely
to a voluntary early retirement program.
Other income was $1.8 million in fiscal 2016 due to cancellation
charges received in the third quarter.
Fiscal 2016 net income was $6.1 million, compared with net
income of $14.7 million in the prior year. Adjusted EBITDA
was $10.9 million, compared with $25.6 million in the prior
year. As a percent of sales, Adjusted EBITDA was 12%,
compared with 19% 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
Adjusted EBITDA as well as a reconciliation of net income to
Adjusted EBITDA.
Graham’s effective tax rate for fiscal 2016 was 30%, compared
with 32% for fiscal 2015. Taxes for fiscal 2016 were
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.
Strong Cash Flows Provide Increased Returns to
Shareholders as well as Reserves for Growth
Cash, cash equivalents and investments at March 31, 2016 were
$65.1 million, reflecting a $4.8 million increase compared with
ending balances at March 31, 2015.
Cash provided by operations in fiscal 2016 was $18.8 million,
compared with $6.3 million in fiscal 2015. The significant
increase was due to strong customer collections, partially offset
by lower net income and decreases in certain current
liabilities.
Capital expenditures were $1.2 million in fiscal 2016, compared
with $5.3 million in the prior year. The majority of the
prior year’s spending was for capacity expansion of the Company’s
Batavia, New York facility, including that to support growth in
U.S. Navy revenue. The Company expects capital expenditures
for fiscal 2017 to be between $2.0 million and $2.5 million,
primarily for equipment upgrades and productivity
enhancements.
Graham had neither borrowings under its credit facility, nor any
long-term debt outstanding, at March 31, 2016.
Jeffrey Glajch, Graham’s Chief Financial Officer, commented, “We
are pleased that we were able to return $12.7 million to
shareholders during fiscal 2016 and still grow our cash and
investment balances by $4.8 million. Our cash returns to
shareholders included $3.3 million in dividends and $9.4 million in
share repurchases made pursuant to our previously announced share
repurchase program. We believe that the strength of our
operations, regardless of the point in the economic cycle, together
with our cash reserves, will continue to support our growth plans,
both organically and through acquisition.”
Backlog Demonstrates Effects of Diversification
Strategy
Orders during the fourth quarter of fiscal 2016 were $17.1
million, net of a $4.9 million cancellation from backlog, down from
$47.4 million in the prior-year fourth quarter which included
significant orders from the U.S. Navy. Gross orders were
$22.0 million in the fiscal 2016 fourth quarter. Orders from
the power and refining markets increased $5.5 million and $2.4
million, respectively. Chemical/petrochemical market orders
were down $6.3 million compared with the prior-year quarter.
Other commercial, industrial and defense orders were down $31.9
million. There were two orders for the refining industry on
hold as of March 31, 2016, valued at $6.4 million.
Orders from U.S. customers were $19.7 million in the fiscal 2016
fourth quarter. Orders from international markets, net of a
$4.9 million cancellation, were negative $2.6 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 was $108.0 million at March 31, 2016,
compared with $113.2 million at December 31, 2015, and $113.8
million at March 31, 2015. Approximately 21% of backlog was
for refinery projects, 11% was for chemical and petrochemical
projects and 17% was for power projects, including nuclear.
Approximately 47% of backlog was for U.S. Navy projects and 4% was
for other industrial or commercial applications.
Approximately 45% to 55% of orders currently in backlog are
expected to be converted to sales within the next 12 months,
approximately 10% to 20% are expected to be converted between the
next 12 to 24 months, and approximately 35% to 45% are expected to
be converted beyond 24 months.
Fiscal 2017 Guidance Anticipates Increased Sales to the
Power Market
The Company expects fiscal 2017 revenue to be between $80
million and $95 million. Gross margin for fiscal 2017 is
expected to be between 24% and 26%, reflecting continued pricing
pressure, underutilization of production facilities, and personnel
investments associated with naval and commercial nuclear
diversification strategies. SG&A expense is estimated to
be between $17.5 million and $18.5 million in fiscal 2017.
Graham is projecting its fiscal 2017 effective tax rate to be
between 32% and 33%.
Mr. Lines concluded, “While our refining and chemical industry
markets continue to exhibit considerable uncertainty, we will
continue to aggressively pursue new orders and defend our leading
market position. To reach the upper end of our revenue
expectations, we require favorable conditions within our more
diverse markets and improvement in the energy markets. We
expect to grow revenue in the utility nuclear power market, as our
initiatives to gain market share have started to materialize.
Looking further out, we expect revenue from the U.S. Navy will
meaningfully expand in fiscal 2018. As we explore inorganic
growth opportunities, we are encouraged by the receptiveness of
management teams at target companies to engage in discussions
regarding potential acquisition by Graham.”
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 the fiscal 2016 fourth quarter and full year, 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 Wednesday, June 1,
2016. To listen to the archived call, dial (858) 384-5517,
and enter conference ID number 13635236. 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
CorporationConsolidated Statements of
Operations(Amounts in thousands, except per share
data) |
|
|
|
|
Three Months Ended |
|
Year Ended |
|
March 31, |
|
March 31, |
|
|
|
|
|
% |
|
|
|
|
% |
|
|
|
2016 |
|
|
|
2015 |
|
Change |
|
|
2016 |
|
|
|
2015 |
|
Change |
|
Net
sales |
$ |
22,301 |
|
|
$ |
37,455 |
|
|
(40 |
%) |
|
$ |
90,039 |
|
|
$ |
135,169 |
|
|
(33 |
%) |
|
Cost of products sold |
|
17,742 |
|
|
|
24,670 |
|
|
(28 |
%) |
|
|
66,784 |
|
|
|
93,365 |
|
|
(28 |
%) |
|
Gross profit |
|
4,559 |
|
|
|
12,785 |
|
|
(64 |
%) |
|
|
23,255 |
|
|
|
41,804 |
|
|
(44 |
%) |
|
Gross profit margin |
|
20.4 |
% |
|
|
34.1 |
% |
|
|
|
25.8 |
% |
|
|
30.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses and
income: |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
3,884 |
|
|
|
4,870 |
|
|
(20 |
%) |
|
|
16,331 |
|
|
|
18,283 |
|
|
(11 |
%) |
|
Selling, general and administrative
– amortization |
|
59 |
|
|
|
58 |
|
|
2 |
% |
|
|
234 |
|
|
|
229 |
|
|
2 |
% |
|
Restructuring charge |
|
- |
|
|
|
1,718 |
|
|
NA |
|
|
- |
|
|
|
1,718 |
|
|
NA |
|
Other income |
|
(5 |
) |
|
|
- |
|
|
NA |
|
|
(1,789 |
) |
|
|
- |
|
|
NA |
|
Operating
profit |
|
621 |
|
|
|
6,139 |
|
|
(90 |
%) |
|
|
8,479 |
|
|
|
21,574 |
|
|
(61 |
%) |
|
Operating profit margin |
|
2.8 |
% |
|
|
16.4 |
% |
|
|
|
9.4 |
% |
|
|
16.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
(84 |
) |
|
|
(50 |
) |
|
68 |
% |
|
|
(261 |
) |
|
|
(189 |
) |
|
38 |
% |
|
Interest expense |
|
2 |
|
|
|
3 |
|
|
(33 |
%) |
|
|
10 |
|
|
|
11 |
|
|
(9 |
%) |
|
Income before provision
for income taxes |
|
703 |
|
|
|
6,186 |
|
|
(89 |
%) |
|
|
8,730 |
|
|
|
21,752 |
|
|
(60 |
%) |
|
Provision for income
taxes |
|
183 |
|
|
|
2,021 |
|
|
(91 |
%) |
|
|
2,599 |
|
|
|
7,017 |
|
|
(63 |
%) |
|
Net
income |
$ |
520 |
|
|
$ |
4,165 |
|
|
(88 |
%) |
|
$ |
6,131 |
|
|
$ |
14,735 |
|
|
(58 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
0.05 |
|
|
$ |
0.41 |
|
|
(88 |
%) |
|
$ |
0.61 |
|
|
$ |
1.46 |
|
|
(58 |
%) |
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
0.05 |
|
|
$ |
0.41 |
|
|
(88 |
%) |
|
$ |
0.61 |
|
|
$ |
1.45 |
|
|
(58 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
9,748 |
|
|
|
10,134 |
|
|
|
|
9,976 |
|
|
|
10,123 |
|
|
|
Diluted |
|
9,752 |
|
|
|
10,149 |
|
|
|
|
9,983 |
|
|
|
10,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
$ |
0.09 |
|
|
$ |
0.08 |
|
|
|
$ |
0.33 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Graham CorporationConsolidated
Balance Sheets(Amounts in thousands, except per share
data) |
|
|
|
|
March 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
24,072 |
|
|
$ |
27,271 |
|
|
Investments |
|
41,000 |
|
|
|
33,000 |
|
|
Trade accounts receivable, net of
allowances ($91 and $62 at |
|
|
|
|
March 31, 2016 and 2015,
respectively) |
|
12,730 |
|
|
|
17,249 |
|
|
Unbilled revenue |
|
11,852 |
|
|
|
18,665 |
|
|
Inventories |
|
10,811 |
|
|
|
13,994 |
|
|
Prepaid expenses and other current
assets |
|
613 |
|
|
|
529 |
|
|
Income taxes receivable |
|
1,652 |
|
|
|
339 |
|
|
Total current assets |
|
102,730 |
|
|
|
111,047 |
|
|
Property, plant and
equipment, net |
|
18,747 |
|
|
|
19,812 |
|
|
Prepaid pension
asset |
|
- |
|
|
|
1,332 |
|
|
Goodwill |
|
6,938 |
|
|
|
6,938 |
|
|
Permits |
|
10,300 |
|
|
|
10,300 |
|
|
Other intangible
assets, net |
|
4,248 |
|
|
|
4,428 |
|
|
Other assets |
|
168 |
|
|
|
146 |
|
|
Total assets |
$ |
143,131 |
|
|
$ |
154,003 |
|
|
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Current portion of capital lease
obligations |
$ |
55 |
|
|
$ |
60 |
|
|
Accounts payable |
|
10,325 |
|
|
|
13,334 |
|
|
Accrued compensation |
|
5,317 |
|
|
|
9,343 |
|
|
Accrued expenses and other current
liabilities |
|
3,826 |
|
|
|
3,247 |
|
|
Customer deposits |
|
8,400 |
|
|
|
4,179 |
|
|
Total current
liabilities |
|
27,923 |
|
|
|
30,163 |
|
|
Capital lease
obligations |
|
157 |
|
|
|
98 |
|
|
Accrued
compensation |
|
- |
|
|
|
124 |
|
|
Deferred income tax
liability |
|
3,546 |
|
|
|
5,876 |
|
|
Accrued pension
liability |
|
1,338 |
|
|
|
315 |
|
|
Accrued postretirement
benefits |
|
787 |
|
|
|
876 |
|
|
Total
liabilities |
|
33,751 |
|
|
|
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 10,433 shares
issued and 9,646 and 10,133 shares outstanding at March 31, 2016
and 2015, |
|
|
|
|
respectively |
|
1,047 |
|
|
|
1,043 |
|
|
Capital in excess of par
value |
|
22,315 |
|
|
|
21,398 |
|
|
Retained earnings |
|
109,013 |
|
|
|
106,178 |
|
|
Accumulated other comprehensive
loss |
|
(10,676 |
) |
|
|
(9,056 |
) |
|
Treasury stock (822 and 299 shares)
|
|
(12,319 |
) |
|
|
(3,012 |
) |
|
Total stockholders’
equity |
|
109,380 |
|
|
|
116,551 |
|
|
Total liabilities and
stockholders’ equity |
$ |
143,131 |
|
|
$ |
154,003 |
|
|
|
|
|
|
|
|
|
|
|
|
Graham Corporation Consolidated Statements of
Cash Flows(Amounts in thousands) |
|
|
|
|
|
Year Ended March 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
Operating
activities: |
|
|
|
|
|
Net income |
|
$ |
6,131 |
|
|
$ |
14,735 |
|
|
Adjustments to reconcile net income
to net cash provided by operating activities: |
|
|
|
|
|
Depreciation |
|
|
2,201 |
|
|
|
2,079 |
|
|
Amortization |
|
|
234 |
|
|
|
229 |
|
|
Amortization of unrecognized prior
service cost and actuarial losses |
|
|
1,214 |
|
|
|
514 |
|
|
Stock-based compensation
expense |
|
|
697 |
|
|
|
653 |
|
|
Loss on disposal of property, plant
and equipment |
|
|
4 |
|
|
|
14 |
|
|
Deferred income taxes |
|
|
(1,522 |
) |
|
|
157 |
|
|
(Increase) decrease in operating
assets: |
|
|
|
|
|
Accounts receivable |
|
|
4,440 |
|
|
|
(6,910 |
) |
|
Unbilled revenue |
|
|
6,783 |
|
|
|
(10,835 |
) |
|
Inventories |
|
|
3,175 |
|
|
|
2,525 |
|
|
Income taxes
payable/receivable |
|
|
(1,309 |
) |
|
|
158 |
|
|
Prepaid expenses and other current
and non-current assets |
|
|
(162 |
) |
|
|
(152 |
) |
|
Prepaid pension asset |
|
|
(1,222 |
) |
|
|
(1,108 |
) |
|
Increase (decrease) in operating
liabilities: |
|
|
|
|
|
Accounts payable |
|
|
(2,836 |
) |
|
|
3,115 |
|
|
Accrued compensation, accrued
expenses and other current and non-current
liabilities |
|
|
(3,178 |
) |
|
|
4,981 |
|
|
Customer deposits |
|
|
4,227 |
|
|
|
(3,834 |
) |
|
Long-term portion of accrued
compensation, accrued pension liability and accrued
postretirement benefits |
|
|
(126 |
) |
|
|
(42 |
) |
|
Net cash provided by
operating activities |
|
|
18,751 |
|
|
|
6,279 |
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
Purchase of property, plant and
equipment |
|
|
(1,153 |
) |
|
|
(5,300 |
) |
|
Proceeds from disposal of property,
plant and equipment |
|
|
3 |
|
|
|
1 |
|
|
Purchase of investments |
|
|
(44,000 |
) |
|
|
(50,000 |
) |
|
Redemption of investments at
maturity |
|
|
36,000 |
|
|
|
46,000 |
|
|
Net cash used by investing
activities |
|
|
(9,150 |
) |
|
|
(9,299 |
) |
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
Principal repayments on capital
lease obligations |
|
|
(59 |
) |
|
|
(80 |
) |
|
Issuance of common stock |
|
|
97 |
|
|
|
47 |
|
|
Dividends paid |
|
|
(3,296 |
) |
|
|
(2,026 |
) |
|
Purchase of treasury stock |
|
|
(9,441 |
) |
|
|
- |
|
|
Excess tax deduction on stock
awards |
|
|
6 |
|
|
|
200 |
|
|
Net cash used by financing
activities |
|
|
(12,693 |
) |
|
|
(1,859 |
) |
|
Effect of exchange rate changes on
cash |
|
|
(107 |
) |
|
|
4 |
|
|
Net decrease in cash and cash
equivalents |
|
|
(3,199 |
) |
|
|
(4,875 |
) |
|
Cash and cash equivalents at
beginning of year |
|
|
27,271 |
|
|
|
32,146 |
|
|
Cash and cash equivalents at end of
period |
|
$ |
24,072 |
|
|
$ |
27,271 |
|
|
|
|
|
|
|
|
Graham CorporationAdjusted EBITDA
Reconciliation—Unaudited (Amounts in thousands) |
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
March 31, |
|
March 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Net
income |
$ |
520 |
|
|
$ |
4,165 |
|
|
$ |
6,131 |
|
|
$ |
14,735 |
|
|
+Net interest income |
|
(82 |
) |
|
|
(47 |
) |
|
|
(251 |
) |
|
|
(178 |
) |
|
+Income taxes |
|
183 |
|
|
|
2,021 |
|
|
|
2,599 |
|
|
|
7,017 |
|
|
+Depreciation &
amortization |
|
585 |
|
|
|
576 |
|
|
|
2,435 |
|
|
|
2,308 |
|
|
+Restructuring charge |
|
- |
|
|
|
1,718 |
|
|
|
- |
|
|
|
1,718 |
|
|
Adjusted
EBITDA |
$ |
1,206 |
|
|
$ |
8,433 |
|
|
$ |
10,914 |
|
|
$ |
25,600 |
|
|
Adjusted EBITDA margin % |
|
5.4 |
% |
|
|
22.5 |
% |
|
|
12.1 |
% |
|
|
18.9 |
% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures:
Adjusted EBITDA is defined as consolidated net income before
interest expense and income, income taxes, depreciation and
amortization and a nonrecurring restructuring charge.
Adjusted EBITDA margin is Adjusted EBITDA divided by sales.
Adjusted EBITDA and Adjusted EBITDA margin are not measures
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 Adjusted EBITDA and Adjusted EBITDA margin are important
for investors and other readers of Graham's financial statements,
as they are used as analytical indicators by Graham's management to
better understand operating performance. Graham’s credit
facility also contains ratios based on EBITDA. Because
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures
and are thus susceptible to varying calculations, Adjusted EBITDA
and Adjusted EBITDA margin, as presented, may not be directly
comparable to other similarly titled measures used by other
companies.
|
Graham CorporationAdditional
Information—Unaudited |
|
|
|
|
|
ORDER & BACKLOG TREND |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q115 |
Q215 |
Q315 |
Q415 |
FY2015 |
Q116 |
Q216 |
Q316 |
Q416 |
FY2016 |
|
|
|
6/30/14 |
9/30/14 |
12/31/14 |
3/31/15 |
Total |
Total |
Total |
Total |
Total |
Total |
|
|
Orders |
$ |
31.1 |
|
$ |
35.4 |
|
$ |
22.6 |
|
$ |
47.4 |
|
$ |
136.5 |
|
$ |
24.0 |
|
$ |
20.6 |
|
$ |
22.3 |
|
$ |
17.1 |
|
$ |
84.0 |
|
|
|
Backlog |
$ |
114.8 |
|
$ |
114.8 |
|
$ |
103.8 |
|
$ |
113.8 |
|
$ |
113.8 |
|
$ |
110.1 |
|
$ |
108.1 |
|
$ |
113.2 |
|
$ |
108.0 |
|
$ |
108.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES BY INDUSTRY FY 2016 |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2016 |
Q1 |
% of |
Q2 |
% of |
Q3 |
% of |
Q4 |
% of |
FY2016 |
% of |
|
|
|
6/30/15 |
Total |
9/30/15 |
Total |
12/31/15 |
Total |
3/31/16 |
Total |
|
Total |
|
|
Refining |
$ |
7.8 |
|
|
28 |
% |
$ |
7.2 |
|
|
32 |
% |
$ |
6.2 |
|
|
36 |
% |
$ |
7.8 |
|
|
35 |
% |
$ |
29.0 |
|
|
32 |
% |
|
|
Chemical/ Petrochemical |
$ |
11.3 |
|
|
41 |
% |
$ |
7.3 |
|
|
32 |
% |
$ |
4.8 |
|
|
28 |
% |
$ |
6.0 |
|
|
27 |
% |
$ |
29.4 |
|
|
33 |
% |
|
|
Power |
$ |
3.7 |
|
|
13 |
% |
$ |
3.0 |
|
|
13 |
% |
$ |
2.7 |
|
|
16 |
% |
$ |
5.2 |
|
|
23 |
% |
$ |
14.6 |
|
|
16 |
% |
|
|
Other Commercial, Industrial and Defense |
$ |
4.8 |
|
|
18 |
% |
$ |
5.3 |
|
|
23 |
% |
$ |
3.6 |
|
|
20 |
% |
$ |
3.3 |
|
|
15 |
% |
$ |
17.0 |
|
|
19 |
% |
|
|
Total |
$ |
27.6 |
|
|
$ |
22.8 |
|
|
$ |
17.3 |
|
|
$ |
22.3 |
|
|
$ |
90.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, Industrial and Defense |
$ |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Graham CorporationAdditional
Information—Unaudited (Continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES BY REGION FY 2016 |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2016 |
Q1 |
% of |
Q2 |
% of |
Q3 |
% of |
Q4 |
% of |
FY2016 |
% of |
|
|
|
6/30/15 |
Total |
9/30/15 |
Total |
12/31/15 |
Total |
3/31/16 |
Total |
|
Total |
|
|
United States |
$ |
17.6 |
|
|
64 |
% |
$ |
15.2 |
|
|
67 |
% |
$ |
10.8 |
|
|
62 |
% |
$ |
13.4 |
|
|
60 |
% |
$ |
57.0 |
|
|
63 |
% |
|
|
Middle East |
$ |
3.3 |
|
|
12 |
% |
$ |
3.8 |
|
|
17 |
% |
$ |
1.7 |
|
|
10 |
% |
$ |
2.2 |
|
|
10 |
% |
$ |
11.0 |
|
|
12 |
% |
|
|
Asia |
$ |
2.9 |
|
|
11 |
% |
$ |
0.8 |
|
|
3 |
% |
$ |
1.6 |
|
|
9 |
% |
$ |
3.6 |
|
|
16 |
% |
$ |
8.9 |
|
|
10 |
% |
|
|
Other |
$ |
3.8 |
|
|
13 |
% |
$ |
3.0 |
|
|
13 |
% |
$ |
3.2 |
|
|
19 |
% |
$ |
3.1 |
|
|
14 |
% |
$ |
13.1 |
|
|
15 |
% |
|
|
Total |
$ |
27.6 |
|
|
$ |
22.8 |
|
|
$ |
17.3 |
|
|
$ |
22.3 |
|
|
$ |
90.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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