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
financial results for its third quarter and nine months ended
December 31, 2016. Graham’s current fiscal year ends March
31, 2017 (“fiscal 2017”).
Net sales in the third quarter were $22.7 million, compared with
net sales of $17.3 million in the third quarter of the fiscal year
ended March 31, 2016 (“fiscal 2016”). Net income in the third
quarter was $1.8 million, or $0.19 per diluted share, compared with
$1.3 million, or $0.13 per diluted share, in the prior-year third
quarter.
James R. Lines, Graham’s President and Chief Executive Officer,
commented, “Our diversification strategies positively impacted the
third quarter results, with approximately one-third of our sales
coming from the U.S. Navy and nuclear power markets.
Additionally, our gross margin in the quarter was significantly and
favorably impacted by conversion of a non-typical order. Our
diversification into markets not directly correlated to energy has
certainly benefited recent performance and is expected to drive
long-term growth.”
Third Quarter Fiscal 2017 Sales Review(See
accompanying financial tables for a breakdown of sales by industry
and region)
Sales growth was favorably impacted by execution of a large
non-typical order received in the second quarter of fiscal
2017. Additionally, sales to the power market were up to $4.4
million compared with $2.7 million in the third quarter of fiscal
2016. Ongoing weakness in the global energy markets is
expected to continue to impact Graham’s traditional refining and
chemical/petrochemical businesses for the remainder of fiscal
2017. From a geographic perspective, sales to the U.S.
were significantly higher than the prior-year third quarter, while
sales to most international markets were down.
Fluctuations in Graham’s sales among geographic locations and
industries can vary measurably from quarter-to-quarter based on the
timing and magnitude of projects. Graham does not believe
that such quarter-to-quarter fluctuations are indicative of
business trends, which it believes are more apparent on a trailing
twelve month basis. Third Quarter Fiscal 2017
Operating Performance Review
($ in millions) |
Q3 FY17 |
|
Q3 FY16 |
|
Change |
|
%Change |
Net sales |
$ |
22.7 |
|
|
$ |
17.3 |
|
|
$ |
5.3 |
|
31 |
% |
Gross profit |
$ |
6.3 |
|
|
$ |
3.5 |
|
|
$ |
2.8 |
|
79 |
% |
Gross
margin |
|
27.8 |
% |
|
|
20.3 |
% |
|
|
|
|
Operating profit |
$ |
2.5 |
|
|
$ |
1.6 |
|
|
$ |
0.9 |
|
59 |
% |
Operating
margin |
|
11.0 |
% |
|
|
9.1 |
% |
|
|
|
|
Net income |
$ |
1.8 |
|
|
$ |
1.3 |
|
|
$ |
0.6 |
|
44 |
% |
Diluted
EPS |
$ |
0.19 |
|
|
$ |
0.13 |
|
|
$ |
0.06 |
|
46 |
% |
|
|
|
|
|
|
|
|
Third quarter gross profit and margin significantly benefited
from a large non-typical order that began converting in the
quarter. The prior-year third quarter was hampered by a very
unfavorable mix of projects which were converted.
Selling, general and administrative (“SG&A”) expenses
increased 2% to $3.8 million. SG&A as a percent of sales
was 17% in the third quarter of fiscal 2017 compared with 22% in
the same prior-year period.
Operating profit in the prior-year third quarter benefited from
$1.8 million of other income resulting from cancellation charges
that were negotiated and settled with customers in that period.
During the third quarter of fiscal 2017, Graham had an effective
tax rate of 29%. The effective tax rate in the third quarter
of fiscal 2016 was 22%, which was favorably impacted by the U.S.
government’s retroactive reinstatement of the federal research and
development tax credit during the Company’s fiscal third quarter
2016.
To summarize, the increase in net income in the third quarter of
fiscal 2017 reflects higher revenue and improved gross margin,
offset by the impact of cancellation charges recorded in last
year’s quarter and a lower effective tax rate in last year’s
quarter.
The comparison of Adjusted EBITDA (consolidated net income
before interest expense and income, income taxes, depreciation and
amortization and a nonrecurring restructuring charge where
applicable) was impacted by similar factors:
($ in millions) |
Q3 FY17 |
|
Q3 FY16 |
|
Change |
|
%Change |
Adjusted EBITDA |
$ |
3.1 |
|
|
$ |
2.2 |
|
|
$ |
0.9 |
|
41 |
% |
Adjusted
EBITDA margin |
|
13.6 |
% |
|
|
12.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Graham believes that, when used in conjunction with measures
prepared in accordance with GAAP, Adjusted EBITDA and Adjusted
EBITDA margin (Adjusted EBITDA as a percentage of sales), 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.
First Nine Months Fiscal 2017 Review
($ in millions) |
YTD FY17 |
|
YTD FY16 |
|
Change |
|
%Change |
Net sales |
$ |
66.1 |
|
|
$ |
67.7 |
|
|
$ |
(1.6 |
) |
|
(2 |
%) |
Gross profit |
$ |
15.4 |
|
|
$ |
18.7 |
|
|
$ |
(3.3 |
) |
|
(18 |
%) |
Gross
margin |
|
23.3 |
% |
|
|
27.6 |
% |
|
|
|
|
Operating profit |
$ |
4.2 |
|
|
$ |
7.9 |
|
|
$ |
(3.7 |
) |
|
(47 |
%) |
Operating
margin |
|
6.3 |
% |
|
|
11.6 |
% |
|
|
|
|
Net income |
$ |
3.2 |
|
|
$ |
5.6 |
|
|
$ |
(2.4 |
) |
|
(43 |
%) |
Diluted
EPS |
$ |
0.33 |
|
|
$ |
0.56 |
|
|
$ |
(0.23 |
) |
|
(41 |
%) |
|
|
|
|
|
|
|
|
International sales of $17.0 million in the first nine months of
fiscal 2017 represented 26% of total sales, compared with $24.0
million, or 35% of sales, in the same prior-year period.
Sales to the U.S. were $49.1 million, or 74%, of net first
nine months sales in fiscal 2017 compared with $43.7 million, or
65%, of fiscal 2016 first nine months net sales.
The decrease in the fiscal 2017 first nine months gross margin
reflects lower pricing due to the deteriorating market conditions
experienced over the past two years.
SG&A in the fiscal 2017 first nine months was $10.6 million,
$2 million, or 16%, lower than the prior-year period. As a
percent of sales, SG&A was 16% in the first nine months of
fiscal 2017 compared with 19% in the same prior-year period.
This improvement reflects lower commissions, lower compensation
costs and other actions taken to reduce costs, as well as the
benefit of insurance proceeds recorded in the second quarter of
fiscal 2017.
Operating profit and margin were impacted by the above factors
as well as the inclusion of a $0.6 million restructuring charge in
fiscal 2017 and the $1.8 million cancellation charge income noted
above as realized in fiscal 2016.
Excluding a $0.4 million net of tax, nonrecurring restructuring
charge recorded in the first nine months of fiscal 2017, adjusted
net income, a non-GAAP number, was $3.7 million or $0.38 per
diluted share. Graham believes that, when used in conjunction
with measures prepared in accordance with GAAP, adjusted net income
helps in the understanding of its operating performance. See
the attached tables for additional important disclosures regarding
Graham’s use of adjusted net income as well as a reconciliation of
GAAP net income to non-GAAP adjusted net income.
The comparison of Adjusted EBITDA reflects similar factors:
($ in millions) |
YTD FY17 |
|
YTD FY16 |
|
Change |
|
%Change |
|
Adjusted EBITDA |
$ |
6.5 |
|
|
$ |
9.7 |
|
|
$ |
(3.1 |
) |
|
(33 |
%) |
|
Adjusted
EBITDA margin |
|
9.9 |
% |
|
|
14.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Balance Sheet Strengthens
Cash, cash equivalents and investments at December 31, 2016 were
$72.7 million, up $7.6 million from the end of fiscal 2016.
The balance at December 31 reflects strong customer deposits that
are expected to unwind over the next couple of quarters.
Cash provided by operations in the first nine months of fiscal
2017 was $10.7 million, compared with $22.2 million in the first
nine months of fiscal 2016. The reduction was primarily due
to lower net income in fiscal 2017 year-to-date as well as
unusually high cash flow from working capital in the prior-year
period.
Capital expenditures were $0.2 million in the first nine months
compared with $0.9 million in the same prior-year period. The
Company expects capital expenditures for fiscal 2017 to be
approximately $0.5 million for the full year. Capital
investments are expected to be used for equipment upgrades and
productivity enhancements.
Dividend payments were $2.6 million for the first nine months of
fiscal 2017, slightly higher than $2.4 million in the prior-year
first nine months.
Graham had neither borrowings under its credit facility, nor any
long-term debt outstanding, at December 31, 2016.
Backlog Continues to Demonstrate Success of
Diversification Strategy
Backlog at the end of the fiscal 2017 first nine months was
$99.1 million, down $4.9 million sequentially from the end of the
fiscal 2017 second quarter due to continued weakness within the
energy markets.
The Company’s backlog mix by industry continues to highlight the
success of its diversification strategy to increase sales to the
U.S. Navy and the power industry. Backlog by industry at
December 31, 2016 was approximately:
- 17% for refinery projects
- 14% for chemical/petrochemical projects
- 9% for power projects, including nuclear
- 57% for U.S. Navy projects
- 3% for other industrial applications
The expected timing for that backlog to convert to sales is as
follows:
- Within next 12 months: 50% to 55%
- Within 12 to 24 months: 5% to 10%
- Beyond 24 months: 35% to 40%
Orders in the third quarter of $17.7 million were down 21% from
$22.3 million in the same prior-year period, as the order climate
remains volatile. Orders from U.S. customers were $10.4
million, or 59%, and orders from international markets were $7.3
million, or 41%, in the third quarter of fiscal 2017. During
the fiscal 2017 third quarter, an order for $0.4 million which had
been on hold was moved into active status. At December 31,
2016 two refining orders in backlog valued at $6.5 million remain
on hold.
Orders for the first nine months of fiscal 2017 were $57.1
million, compared with $66.8 million in the first nine months of
fiscal 2016. Orders from U.S. customers were $39.4 million,
or 69%, and orders from international markets were $17.7 million,
or 31%, in the first nine months of fiscal 2017. This
compares with 55% U.S. and 45% international in the first nine
months of fiscal 2016.
Graham expects that the balance between domestic and
international orders will continue to be variable between
quarters.
FY 2017 Guidance Update and Outlook
Mr. Lines stated, “As we enter the fourth quarter of our fiscal
year, we have clearer visibility into our expected full year
performance. Accordingly, we’ve tightened our revenue
expectations within our prior range. Our gross margin and
SG&A guidance are unchanged and we lowered our tax rate
guidance. Looking forward, we anticipate SG&A at a
quarterly run rate of approximately $4 million.”
Graham is updating its fiscal 2017 guidance, as follows:
- Revenue is anticipated to be between $88 and $92 million
- Gross margin is expected to be between 21% and 23%
- SG&A expense is expected to be between $15 and $15.5
million, inclusive of the $0.6 million restructuring charge
- Effective tax rate is anticipated to be between 28% and
30%
Mr. Lines concluded, “There are positive qualitative indications
within our energy markets that improvement is underway, however, it
has not yet translated into quantitative improvement in the number
or quality of bidding opportunities. We expect that
improvement will materialize in due course, consistent with normal
energy cycle performance.”
Webcast and Conference Call Graham’s 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 2017 third quarter, 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,
February 8, 2017. To listen to the archived call, dial (412)
317-6671, and enter conference ID number 13652421. 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 its 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. and its
operations in China, 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 CorporationThird
Quarter Fiscal 2017Consolidated Statements of
Operations—Unaudited(Amounts in thousands, except per
share data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
December
31, |
|
December
31, |
|
|
|
|
|
|
|
|
|
|
|
|
2016 |
|
|
|
2015 |
|
%Change |
|
|
2016 |
|
|
|
2015 |
|
%Change |
Net
sales |
$ |
22,654 |
|
|
$ |
17,323 |
|
31 |
% |
|
$ |
66,145 |
|
|
$ |
67,738 |
|
(2 |
%) |
Cost of
products sold |
|
16,353 |
|
|
|
13,799 |
|
19 |
% |
|
|
50,723 |
|
|
|
49,042 |
|
3 |
% |
Gross
profit |
|
6,301 |
|
|
|
3,524 |
|
79 |
% |
|
|
15,422 |
|
|
|
18,696 |
|
(18 |
%) |
Gross
margin |
|
27.8 |
% |
|
|
20.3 |
% |
|
|
|
23.3 |
% |
|
|
27.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Other expenses and
income: |
|
|
|
|
|
|
|
|
|
Selling,
general and administrative |
|
3,746 |
|
|
|
3,680 |
|
2 |
% |
|
|
10,462 |
|
|
|
12,447 |
|
(16 |
%) |
Selling,
general and administrative – amortization |
|
58 |
|
|
|
58 |
|
0 |
% |
|
|
175 |
|
|
|
175 |
|
0 |
% |
Restructuring charge |
|
- |
|
|
|
- |
|
NA |
|
|
630 |
|
|
|
- |
|
NA |
Other
income |
|
- |
|
|
|
(1,784 |
) |
NA |
|
|
- |
|
|
|
(1,784 |
) |
NA |
Operating profit |
|
2,497 |
|
|
|
1,570 |
|
59 |
% |
|
|
4,155 |
|
|
|
7,858 |
|
(47 |
%) |
Operating
margin |
|
11.0 |
% |
|
|
9.1 |
% |
|
|
|
6.3 |
% |
|
|
11.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
(100 |
) |
|
|
(72 |
) |
39 |
% |
|
|
(272 |
) |
|
|
(177 |
) |
54 |
% |
Interest
expense |
|
3 |
|
|
|
4 |
|
(25 |
%) |
|
|
7 |
|
|
|
8 |
|
(13 |
%) |
Income before provision
for income taxes |
|
2,594 |
|
|
|
1,638 |
|
58 |
% |
|
|
4,420 |
|
|
|
8,027 |
|
(45 |
%) |
Provision for income
taxes |
|
754 |
|
|
|
364 |
|
107 |
% |
|
|
1,198 |
|
|
|
2,416 |
|
(50 |
%) |
Net
income |
$ |
1,840 |
|
|
$ |
1,274 |
|
44 |
% |
|
$ |
3,222 |
|
|
$ |
5,611 |
|
(43 |
%) |
|
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
0.19 |
|
|
$ |
0.13 |
|
46 |
% |
|
$ |
0.33 |
|
|
$ |
0.56 |
|
(41 |
%) |
Diluted: |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
0.19 |
|
|
$ |
0.13 |
|
46 |
% |
|
$ |
0.33 |
|
|
$ |
0.56 |
|
(41 |
%) |
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
9,727 |
|
|
|
9,922 |
|
|
|
|
9,709 |
|
|
|
10,051 |
|
|
Diluted |
|
9,733 |
|
|
|
9,927 |
|
|
|
|
9,714 |
|
|
|
10,059 |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
$ |
0.09 |
|
|
$ |
0.08 |
|
|
|
$ |
0.27 |
|
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Graham CorporationThird
Quarter Fiscal 2017Consolidated Balance
Sheets—Unaudited(Amounts in thousands, except per share
data) |
|
|
|
|
|
|
|
December 31, |
|
March 31, |
|
|
|
2016 |
|
|
|
2016 |
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
37,677 |
|
|
$ |
24,072 |
|
|
Investments |
|
35,000 |
|
|
|
41,000 |
|
|
Trade
accounts receivable, net of allowances ($30 and $91 at |
|
|
|
|
December
31 and March 31, 2016, respectively) |
|
11,490 |
|
|
|
12,730 |
|
|
Unbilled
revenue |
|
14,503 |
|
|
|
11,852 |
|
|
Inventories |
|
9,109 |
|
|
|
10,811 |
|
|
Prepaid
expenses and other current assets |
|
1,060 |
|
|
|
613 |
|
|
Income
taxes receivable |
|
550 |
|
|
|
1,652 |
|
|
Total
current assets |
|
109,389 |
|
|
|
102,730 |
|
|
Property, plant and
equipment, net |
|
17,384 |
|
|
|
18,747 |
|
|
Goodwill |
|
6,938 |
|
|
|
6,938 |
|
|
Permits |
|
10,300 |
|
|
|
10,300 |
|
|
Other intangible
assets, net |
|
4,113 |
|
|
|
4,248 |
|
|
Other assets |
|
204 |
|
|
|
168 |
|
|
Total assets |
$ |
148,328 |
|
|
$ |
143,131 |
|
|
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Current
portion of capital lease obligations |
$ |
55 |
|
|
$ |
55 |
|
|
Accounts
payable |
|
8,071 |
|
|
|
10,325 |
|
|
Accrued
compensation |
|
4,977 |
|
|
|
5,317 |
|
|
Accrued
expenses and other current liabilities |
|
3,486 |
|
|
|
3,826 |
|
|
Customer
deposits |
|
15,095 |
|
|
|
8,400 |
|
|
Total
current liabilities |
|
31,684 |
|
|
|
27,923 |
|
|
Capital lease
obligations |
|
119 |
|
|
|
157 |
|
|
Accrued
compensation |
|
11 |
|
|
|
- |
|
|
Deferred income tax
liability |
|
3,967 |
|
|
|
3,546 |
|
|
Accrued pension
liability |
|
797 |
|
|
|
1,338 |
|
|
Accrued postretirement
benefits |
|
809 |
|
|
|
787 |
|
|
Total liabilities |
|
37,387 |
|
|
|
33,751 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Preferred
stock, $1.00 par value, 500 shares authorized |
|
- |
|
|
|
- |
|
|
Common
stock, $.10 par value, 25,500 shares authorized |
|
|
|
|
10,545 and 10,468 shares issued and 9,729 and 9,646shares
outstanding at December 31 and March 31, 2016, |
|
|
|
|
|
|
|
|
respectively |
|
1,054 |
|
|
|
1,047 |
|
|
Capital
in excess of par value |
|
22,843 |
|
|
|
22,315 |
|
|
Retained
earnings |
|
109,619 |
|
|
|
109,013 |
|
|
Accumulated other comprehensive loss |
|
(10,285 |
) |
|
|
(10,676 |
) |
|
Treasury
stock (816 and 822 shares at December 31 and |
|
|
|
|
March 31,
2016, respectively) |
|
(12,290 |
) |
|
|
(12,319 |
) |
|
Total stockholders’ equity |
|
110,941 |
|
|
|
109,380 |
|
|
Total liabilities and stockholders’ equity |
$ |
148,328 |
|
|
$ |
143,131 |
|
|
|
|
|
|
|
|
|
|
|
Graham CorporationThird
Quarter Fiscal 2017Consolidated Statements of Cash
Flows—Unaudited(Amounts in thousands) |
|
|
|
|
|
|
|
Nine Months Ended December
31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
Operating
activities: |
|
|
|
|
|
Net
income |
|
$ |
3,222 |
|
|
$ |
5,611 |
|
|
Adjustments to reconcile net income to net cash provided by
operatingactivities: |
|
|
|
|
|
Depreciation |
|
|
1,571 |
|
|
|
1,675 |
|
|
Amortization |
|
|
175 |
|
|
|
175 |
|
|
Amortization of unrecognized prior service cost and actuarial
losses |
|
|
1,043 |
|
|
|
911 |
|
|
Stock-based compensation expense |
|
|
433 |
|
|
|
540 |
|
|
Loss
(gain) on disposal or sale of property, plant and equipment |
|
|
1 |
|
|
|
(1 |
) |
|
Deferred
income taxes |
|
|
10 |
|
|
|
596 |
|
|
(Increase) decrease in operating assets: |
|
|
|
|
|
Accounts
receivable |
|
|
1,126 |
|
|
|
6,329 |
|
|
Unbilled
revenue |
|
|
(2,651 |
) |
|
|
10,152 |
|
|
Inventories |
|
|
1,697 |
|
|
|
2,186 |
|
|
Prepaid
expenses and other current and non-current assets |
|
|
(489 |
) |
|
|
(420 |
) |
|
Income
taxes payable/receivable |
|
|
1,109 |
|
|
|
(2,531 |
) |
|
Prepaid
pension asset |
|
|
- |
|
|
|
(917 |
) |
|
Increase
(decrease) in operating liabilities: |
|
|
|
|
|
Accounts
payable |
|
|
(2,173 |
) |
|
|
(2,216 |
) |
|
Accrued
compensation, accrued expenses and other current and
non-current liabilities |
|
|
(558 |
) |
|
|
(3,795 |
) |
|
Customer
deposits |
|
|
6,699 |
|
|
|
3,944 |
|
|
Long-term
portion of accrued compensation, accrued pension liability
and accrued postretirement benefits |
|
|
(508 |
) |
|
|
(68 |
) |
|
Net cash provided by operating activities |
|
|
10,707 |
|
|
|
22,171 |
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
Purchase
of property, plant and equipment |
|
|
(241 |
) |
|
|
(883 |
) |
|
Proceeds
from disposal of property, plant and equipment |
|
|
- |
|
|
|
4 |
|
|
Purchase
of investments |
|
|
(39,000 |
) |
|
|
(36,000 |
) |
|
Redemption of investments at maturity |
|
|
45,000 |
|
|
|
27,000 |
|
|
Net cash provided (used) by investing
activities |
|
|
5,759 |
|
|
|
(9,879 |
) |
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
Principal
repayments on capital lease obligations |
|
|
(38 |
) |
|
|
(42 |
) |
|
Issuance
of common stock |
|
|
79 |
|
|
|
97 |
|
|
Dividends
paid |
|
|
(2,616 |
) |
|
|
(2,415 |
) |
|
Purchase
of treasury stock |
|
|
(29 |
) |
|
|
(5,852 |
) |
|
Excess
tax (deficiency) benefit on stock awards |
|
|
(26 |
) |
|
|
5 |
|
|
Net cash used by financing activities |
|
|
(2,630 |
) |
|
|
(8,207 |
) |
|
Effect of
exchange rate changes on cash |
|
|
(231 |
) |
|
|
(141 |
) |
|
Net
increase in cash and cash equivalents |
|
|
13,605 |
|
|
|
3,944 |
|
|
Cash and
cash equivalents at beginning of year |
|
|
24,072 |
|
|
|
27,271 |
|
|
Cash and
cash equivalents at end of period |
|
$ |
37,677 |
|
|
$ |
31,215 |
|
|
|
|
|
|
|
|
|
|
|
|
Graham CorporationThird
Quarter Fiscal 2017Adjusted Net Income
Reconciliation—Unaudited(Amounts
in thousands, except per share data) |
|
Three Months Ended |
|
Nine Months Ended |
|
December 31, |
|
December 31, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
|
2015 |
|
|
Per DilutedShare |
|
|
Per DilutedShare |
|
|
Per DilutedShare |
|
|
Per DilutedShare |
Net
income |
$ |
1,840 |
$ |
0.19 |
|
$ |
1,274 |
$ |
0.13 |
|
$ |
3,222 |
|
$ |
0.33 |
|
|
$ |
5,611 |
$ |
0.56 |
+
Restructuring charge |
|
- |
|
- |
|
|
- |
|
- |
|
|
630 |
|
|
0.06 |
|
|
|
- |
|
- |
- Tax
effect |
|
- |
|
- |
|
|
- |
|
- |
|
|
(189 |
) |
|
(0.02 |
) |
|
|
- |
|
- |
Adjusted net
income |
$ |
1,840 |
$ |
0.19 |
|
$ |
1,274 |
$ |
0.13 |
|
$ |
3,663 |
|
$ |
0.38 |
|
|
$ |
5,611 |
$ |
0.56 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measure:
Adjusted net income is defined as GAAP net income excluding a
nonrecurring restructuring charge. Adjusted net income 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 Adjusted net income 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. Because Adjusted net income is a non-GAAP
measure and is thus susceptible to varying calculations, Adjusted
net income, as presented, may not be directly comparable to other
similarly titled measures used by other companies.
|
|
|
|
Graham CorporationThird
Quarter Fiscal 2017Adjusted EBITDA
Reconciliation—Unaudited (Amounts in thousands) |
|
Three Months Ended |
|
Nine Months Ended |
|
December 31, |
|
December 31, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Net
income |
$ |
1,840 |
|
|
$ |
1,274 |
|
|
$ |
3,222 |
|
|
$ |
5,611 |
|
+ Net
interest income |
|
(97 |
) |
|
|
(68 |
) |
|
|
(265 |
) |
|
|
(169 |
) |
+ Income
taxes |
|
754 |
|
|
|
364 |
|
|
|
1,198 |
|
|
|
2,416 |
|
+
Depreciation & amortization |
|
581 |
|
|
|
607 |
|
|
|
1,746 |
|
|
|
1,850 |
|
+
Restructuring charge |
|
- |
|
|
|
- |
|
|
|
630 |
|
|
|
- |
|
Adjusted
EBITDA |
$ |
3,078 |
|
|
$ |
2,177 |
|
|
$ |
6,531 |
|
|
$ |
9,708 |
|
Adjusted
EBITDA margin % |
|
13.6 |
% |
|
|
12.6 |
% |
|
|
9.9 |
% |
|
|
14.3 |
% |
|
|
|
|
|
|
|
|
Non-GAAP Financial Measure:
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 CorporationThird
Quarter Fiscal 2017Additional
Information—Unaudited |
|
|
ORDER & BACKLOG TREND |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q116 |
Q216 |
Q316 |
Q416 |
FY2016 |
Q117 |
Q217 |
Q317 |
|
|
|
|
|
Total |
Total |
Total |
Total |
Total |
Total |
Total |
Total |
|
|
|
|
Orders |
$ |
24.0 |
$ |
20.6 |
|
$ |
22.3 |
$ |
17.1 |
|
$ |
84.0 |
$ |
14.6 |
|
$ |
24.8 |
$ |
17.7 |
|
|
|
|
|
Backlog |
$ |
110.1 |
$ |
108.1 |
|
$ |
113.2 |
$ |
108.0 |
|
$ |
108.0 |
$ |
99.9 |
|
$ |
104.0 |
$ |
99.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES BY INDUSTRY FY 2017 |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2017 |
Q1 |
% of |
Q2 |
% of |
Q3 |
% of |
|
|
|
|
|
|
|
6/30/16 |
Total |
9/30/16 |
Total |
12/31/16 |
Total |
|
|
|
|
|
|
Refining |
$ |
7.2 |
|
32 |
% |
$ |
6.7 |
|
32 |
% |
$ |
6.3 |
|
28 |
% |
|
|
|
|
|
|
Chemical/ Petrochemical |
$ |
5.2 |
|
23 |
% |
$ |
5.1 |
|
24 |
% |
$ |
4.3 |
|
19 |
% |
|
|
|
|
|
|
Power |
$ |
4.7 |
|
21 |
% |
$ |
6.1 |
|
29 |
% |
$ |
4.4 |
|
19 |
% |
|
|
|
|
|
|
Defense and Other Industrial |
$ |
5.3 |
|
24 |
% |
$ |
3.2 |
|
15 |
% |
$ |
7.7 |
|
34 |
% |
|
|
|
|
|
|
Total |
$ |
22.4 |
|
$ |
21.1 |
|
$ |
22.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
% |
|
|
Defense and Other Industrial |
$ |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Graham CorporationThird
Quarter Fiscal 2017Additional
Information—Unaudited (Continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES BY REGION FY 2017 |
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2017 |
Q1 |
% of |
Q2 |
% of |
Q3 |
% of |
|
|
|
|
|
|
|
6/30/16 |
Total |
9/30/16 |
Total |
12/31/16 |
Total |
|
|
|
|
|
|
United States |
$ |
16.3 |
|
73 |
% |
$ |
15.4 |
|
73 |
% |
$ |
17.5 |
|
77 |
% |
|
|
|
|
|
|
Middle East |
$ |
1.0 |
|
4 |
% |
$ |
0.5 |
|
2 |
% |
$ |
0.8 |
|
3 |
% |
|
|
|
|
|
|
Asia |
$ |
3.1 |
|
14 |
% |
$ |
1.2 |
|
6 |
% |
$ |
1.6 |
|
7 |
% |
|
|
|
|
|
|
Other |
$ |
2.0 |
|
9 |
% |
$ |
4.0 |
|
19 |
% |
$ |
2.8 |
|
13 |
% |
|
|
|
|
|
|
Total |
$ |
22.4 |
|
$ |
21.1 |
|
$ |
22.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
Graham (NYSE:GHM)
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From Jun 2024 to Jul 2024
Graham (NYSE:GHM)
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From Jul 2023 to Jul 2024