- Revenue was $17.2 million, earnings
per share was $0.01 in third quarter
- Third quarter orders were $23
million, backlog of $133.7 million
- Fiscal 2019 revenue expectations are
between $90 million and $95 million, a 16% to 22% increase over
prior year
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, 2018. Graham’s current fiscal year ends March 31, 2019
(“fiscal 2019”).
Net sales in the third quarter of fiscal 2019 were $17.2
million, nearly equal to the third quarter of the fiscal year ended
March 31, 2018 (“fiscal 2018”). Net income and diluted earnings per
share (“EPS”) in the fiscal 2019 third quarter were $95,000 and
$0.01, respectively. Net loss in the fiscal 2018 third quarter was
$11.6 million, or $1.19 per diluted share. Excluding non-cash
charges for goodwill and intangible asset impairments as well as
other related charges and the impact of the tax reform legislation
passed in December 2017, adjusted net income and adjusted EPS for
the third quarter of fiscal 2018 were breakeven.
James R. Lines, Graham’s President and Chief Executive Officer,
commented, “Results for the quarter were in line with our
expectations announced earlier this month. Third quarter revenue
and profitability were impacted by delays in converting backlog.
Historically, this is not unusual for our large projects where
revenue is pushed into subsequent quarters due to various causes
including engineering change orders, delayed customer releases, and
customer holds. We continue to execute and serve customers well,
and we intend to continue to invest in process improvement,
workforce training, safety and capital expenditures to create
capacity and increase productivity.”
He added, “Our year-to-date operating cash flow was strong at
$8.5 million. Further, we believe that order levels have remained
reasonable, given the overall uncertainty in our markets. This has
led to a year-to-date book-to-bill ratio of 1.2x.”
Third Quarter Fiscal 2019 Sales Summary
(See accompanying financial tables for a breakdown of sales by
industry and region)
Fiscal 2019 third quarter revenue was unfavorably impacted by
$1.1 million upon the required adoption by the Company of a new
revenue recognition accounting standard which began in fiscal 2019.
Consolidated net sales were down $0.1 million, with varied
fluctuations by industry. Sales to the refining and power markets
grew $1.2 million and $1.0 million, respectively. Sales to the
chemical/petrochemical and the Company’s other commercial,
industrial and defense markets declined $1.3 million and $1.0
million, respectively.
From a geographic perspective, U.S. sales represented 83% of
consolidated sales in the fiscal 2019 third quarter compared with
65% in the third quarter of fiscal 2018. International sales were
17% of consolidated sales in the fiscal 2019 quarter, compared with
35% in the prior-year comparable period. U.S. based sales were
driven by the refining and power markets noted above.
Fluctuations in Graham’s sales among geographic locations and
industries can vary measurably from quarter-to-quarter based on the
timing and magnitude of projects. Graham does not believe that such
quarter-to-quarter fluctuations are indicative of business trends,
which it believes are more apparent on a trailing twelve month
basis.
Third Quarter Fiscal 2019 Operating Performance
Review
($ in millions except per share data)
Q3 FY19
Q3 FY18 Change Net sales $ 17.2 $ 17.3
$ (0.1) Gross profit $ 3.7 $ 3.5 $ 0.2 Gross margin 21.8% 20.2%
Operating loss $ (0.6) $ (15.4) $ 14.8 Operating margin (3.3%)
(89.2%) Net interest and other income $ 0.6 $ 0.3 $ 0.3 Net income
(loss) $ 0.1 $ (11.6) $ 11.7 Diluted EPS $ 0.01 $ (1.19) $ 1.20
Non-GAAP financial measure: Adjusted net income $ 0.1 $
(0.0) $ 0.1 Adjusted diluted EPS $ 0.01 $ (0.00) $ 0.01
The improvement in operating loss, operating margin, net income
(loss) and diluted EPS during the third quarter compared with the
prior year’s quarter was primarily driven by last year’s inclusion
of an impairment charge on goodwill and intangible assets. Adjusted
net income and EPS exclude that charge as well as other items
discussed above, resulting in both periods having adjusted net
income and adjusted EPS close to breakeven.
Third quarter fiscal 2019 gross profit and margin benefited from
improved pricing and mix, partially offset by under-absorbed
production costs which have been increased to support more
production capacity.
Selling, general and administrative (“SG&A”) expenses of
$4.3 million increased $0.2 million compared with the prior-year
period. The increase was primarily due to higher compensation costs
for new personnel, higher sales-related costs, and higher
performance-based compensation. SG&A as a percent of sales was
approximately 25% and 24% in the third quarters of fiscal 2019 and
fiscal 2018, respectively.
During the third quarter of fiscal 2019, Graham’s effective tax
rate was not meaningful due to the proximity of the Company’s
results to breakeven. The prior year’s tax benefit included the
impact of adopting the 2017 U.S. Tax Cuts and Jobs Act, which is
having a beneficial impact on the fiscal 2019 year-to-date
effective tax rate.
Adjusted EBITDA ($ in millions)
Q3 FY19 Q3 FY18 Change Adjusted EBITDA $ 0.2 $
0.4 $ (0.2) Adjusted EBITDA margin 1.1% 2.1%
Adjusted EBITDA (defined as consolidated net income before
interest expense and income, income taxes, depreciation and
amortization, a nonrecurring restructuring charge and impairment of
goodwill and intangible assets associated with the revaluation of
the nuclear business, where applicable) during the fiscal 2019
third quarter was modestly lower than the prior year.
Graham believes that, when used in conjunction with measures
prepared in accordance with GAAP, adjusted net income, non-GAAP
diluted EPS, 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. Moreover,
Graham’s credit facility also contains ratios based on EBITDA. See
the attached tables for additional important disclosures regarding
Graham’s use of adjusted net income, non-GAAP diluted EPS, adjusted
EBITDA and adjusted EBITDA margin as well as reconciliations of net
income to adjusted net income and adjusted EBITDA.
Nine Month Year-to-Date Fiscal 2019 Review
($ in millions except per share data)
YTD FY19
YTD FY18 Change Net sales $ 68.2 $ 55.4
$ 12.8 Gross profit $ 17.1 $ 12.0 $ 5.1 Gross margin 25.1% 21.7%
Operating profit (loss) $ 3.4 $ (14.7) $ 18.1 Operating margin 5.0%
(26.5%) Net income (loss) $ 4.2 $ (10.7) $ 14.9 Diluted EPS
$ 0.43 $ (1.09) $ 1.52 Non-GAAP financial measure: Adjusted
net income $ 4.2 $ 1.2 $ 3.0 Adjusted diluted EPS $ 0.43 $ 0.12 $
0.31
Similar to the third quarter, the improvement in operating
profit (loss), operating margin, net income (loss) and diluted EPS
during the first nine months of fiscal 2019 compared with the prior
year’s period was primarily driven by last year’s inclusion of an
impairment charge on goodwill and intangible assets. Adjusted net
income and adjusted EPS exclude that charge as well as other items
discussed above, resulting in a $3 million and $0.31 improvement
over the prior-year nine month period, respectively, driven by
operating performance.
International sales were $25.4 million in the first nine months
of fiscal 2019 and represented 37% of total sales, compared with
$18.2 million, or 33%, of sales in the same prior-year period.
Sales to the U.S. were $42.8 million, or 63%, of year-to-date net
sales in fiscal 2019, compared with $37.2 million, or 67%, of
fiscal 2018 year-to-date net sales. Fiscal 2019 year-to-date
revenue benefited by $0.8 million upon the required adoption by the
Company of a new revenue recognition accounting standard which
began in fiscal 2019.
The increase in gross profit and margin were driven by higher
volume stemming from a 23% increase in sales when compared with the
same prior-year period, as well as ongoing improvement to backlog
quality and project mix, partially offset by higher production
costs.
SG&A in the first nine months of fiscal 2019 was $13.7
million, up 19% or $2.2 million. As a percent of sales, SG&A
was 20% for year-to-date fiscal 2019 compared with 21% in the same
prior-year period. The increase in SG&A resulted from the same
factors that impacted the quarterly comparison.
During the nine months ended December 31, 2018, Graham had an
effective tax rate of 16%, benefiting from the U.S. Tax Cuts and
Jobs Act. The effective tax rate for the nine months ended December
31, 2017 was 23%.
Adjusted EBITDA ($ in millions)
YTD FY19 YTD FY18 Change Adjusted EBITDA $ 5.7
$ 2.8 $ 2.9 Adjusted EBITDA margin 8.3% 5.0%
Adjusted EBITDA for the fiscal 2019 year-to-date period
benefited from higher revenue and gross margin improvement,
partially offset by investments in SG&A.
Graham believes that, when used in conjunction with measures
prepared in accordance with GAAP, adjusted net income, non-GAAP
diluted EPS, 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 net income, non-GAAP
diluted EPS, adjusted EBITDA and adjusted EBITDA margin as well as
reconciliations of net income to adjusted net income and adjusted
EBITDA.
Balance Sheet Strength Supports Growth
Cash, cash equivalents and investments at December 31, 2018 were
$80.4 million, up $3.9 million from March 31, 2018. The increase
resulted primarily from higher operating cash flow during the first
nine months of fiscal 2019, partially offset by higher capital
expenditures.
Fiscal 2019 year-to-date cash provided by operations was $8.5
million, compared with $3.9 million year-to-date in fiscal 2018.
The increase was primarily the result of higher net income and
timing of changes in working capital.
Capital expenditures were approximately $1.5 million in the
first nine months of fiscal 2019, compared with $0.5 million in the
prior-year period. The Company continues to expect capital
expenditures for fiscal 2019 to be between $2 million and $2.5
million, the majority of which are expected to be used for
productivity enhancements.
Dividend payments were $2.9 million and $2.6 million in the
first nine months of fiscal 2019 and fiscal 2018, respectively.
Graham had neither borrowings under its credit facility, nor any
long-term debt outstanding, at December 31, 2018.
Backlog Level Supports Continued Growth
Backlog at the end of the third quarter of fiscal 2019 was a
record $133.7 million, up from $127.8 at the end of the trailing
quarter, and up from $96.2 million at the end of the prior-year
third quarter. The year-to-date fiscal 2019 book-to-bill ratio was
1.2x.
The Company believes that its backlog mix by industry highlights
the success of its diversification strategy to increase sales to
the U.S. Navy. Backlog by industry at December 31, 2018 was
approximately:
- 50% for U.S. Navy projects
- 23% for refinery projects
- 20% for chemical/petrochemical
projects
- 5% for power projects, including
nuclear
- 2% for other industrial
applications
The expected timing for the Company’s backlog to convert to
sales is as follows:
- Within next 12 months: 50% to 55%
- Within 12 to 24 months: 10% to 20%
- Beyond 24 months: 30% to 40%
Orders were $23.2 million in the third quarter of fiscal 2019,
driven primarily by the chemical/petrochemical and refining
industries in North America and Asia. In the fiscal 2019 third
quarter, orders from U.S. and international customers were evenly
split at $11.6 million from each geographic market region. This
compares with 47% from the U.S. and 53% from international markets
in the third quarter of fiscal 2018.
Orders for the first nine months of fiscal 2019 were $79.6
million, compared with $68.7 million in the first nine months of
fiscal 2018. The increase was driven by the chemical/petrochemical
industry, which was up $19.8 million. Orders from U.S. customers
were $51.1 million, or 64%, and orders from international markets
were $28.5 million, or 36%, in the first nine months of fiscal
2019. Approximately 47% of international orders were from the
Middle East and 32% were from Asia. In the first nine months of
fiscal 2018, 61% of orders were from U.S. customers and 39% were
international.
Graham expects that the balance between domestic and
international orders, as well as orders by industry, will continue
to be variable between quarters.
Confirming FY 2019 Revenue and Gross Margin Guidance
Graham is confirming its fiscal 2019 revenue, gross margin and
tax rate guidance, with a modest update to its SG&A guidance,
as follows:
- Revenue anticipated to be between $90
million and $95 million (updated onJanuary 15, 2019)
- Gross margin expected to be between 25%
and 27%
- SG&A expense expected to be between
$18.25 million and $18.75 million (previously estimated between
$18.5 million and $18.75 million)
- Effective tax rate anticipated to be
approximately 20%
Mr. Lines concluded, “We continue to believe that we are in the
early stage of the energy cycle recovery. We look forward to this
fiscal year as the first of several years of anticipated growth,
which we expect will be complemented by our execution of Navy
orders from our backlog. Additionally, we continue to evaluate
opportunities to prudently put our capital to work, in support of
our profitable growth initiatives.”
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 its financial condition
and operating results for the third quarter and first nine months
of fiscal 2019, 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 2:00 p.m. ET today
through Wednesday, February 6, 2019. To listen to the archived
call, dial (412) 317-6671 and enter conference ID number 13686187.
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,” “look towards” 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 and other international locations, 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 2019
Consolidated Statements of Operations –
Unaudited
(Amounts in thousands, except per share
data)
Three Months Ended Nine Months Ended
December 31, December 31, 2018
2017 % Change 2018
2017 % Change Net sales $
17,198 $ 17,281 (0%)
$ 68,190
$ 55,356 23% Cost of products sold 13,456
13,785 (2%) 51,079 43,341 18% Gross profit
3,742 3,496 7% 17,111 12,015 42% Gross margin 21.8% 20.2% 25.1%
21.7% Other expenses and income:
Selling, general and administrative 4,249 4,037 5% 13,518 11,362
19% Selling, general and administrative – amortization 59 59 0% 178
177 1% Impairment of goodwill and intangible assets - 14,816 (100%)
- 14,816 (100%) Restructuring charge - - N/A -
316 (100%)
Operating (loss) profit
(566) (15,416) (96%)
3,415
(14,656) N/A Operating margin (3.3%) (89.2%) 5.0%
(26.5%) Other income (206) (119) 73% (618) (358) 73%
Interest income (404) (142) 185% (1,044) (455) 129% Interest
expense 5 3 67% 8 8 0% Income (loss)
before (benefit) provision for income taxes 39 (15,158) N/A 5,069
(13,851) N/A (Benefit) provision for income taxes (56)
(3,536) N/A 824 (3,174) N/A
Net income
(loss) $ 95 $ (11,622) N/A
$
4,245 $ (10,677) N/A Per share data:
Basic: Net income $ 0.01 $ (1.19) N/A $ 0.43 $ (1.09) N/A Diluted:
Net income $ 0.01 $ (1.19) N/A $ 0.43 $ (1.09) N/A Weighted
average common shares outstanding: Basic 9,832 9,768 9,817 9,762
Diluted 9,845 9,768 9,832 9,762 Dividends declared per share
$ 0.10 $ 0.09 $ 0.29 $ 0.27 N/A: Not Applicable
Graham Corporation
Third Quarter Fiscal 2019
Consolidated Balance Sheets
(Amounts in thousands, except per share
data)
December 31, March 31, 2018 2018
(Unaudited) Assets Current assets: Cash and
cash equivalents $ 16,675 $ 40,456 Investments 63,732 36,023 Trade
accounts receivable, net of allowances ($389 and $339 at December
31 and March 31, 2018, respectively) 15,157 17,026 Unbilled revenue
7,317 8,079 Inventories 22,525 11,566 Prepaid expenses and other
current assets 1,671 772 Income taxes receivable 708
1,478 Total current assets 127,785 115,400 Property, plant and
equipment, net 17,365 17,052 Prepaid pension asset 5,262 4,369
Goodwill 1,222 1,222 Permits 1,700 1,700 Other intangible assets,
net 3,253 3,388 Other assets 174 202
Total
assets $ 156,761 $ 143,333
Liabilities and stockholders’ equity Current liabilities:
Current portion of capital lease obligations $ 52 $ 88 Accounts
payable 7,477 16,151 Accrued compensation 5,186 4,958 Accrued
expenses and other current liabilities 3,822 2,885 Customer
deposits 32,572 13,213 Total current liabilities
49,109 37,295 Capital lease obligations 109 55 Deferred income tax
liability 1,437 1,427 Accrued pension liability 638 565 Accrued
postretirement benefits 659 642
Total
liabilities 51,952 39,984
Stockholders’ equity: Preferred stock, $1.00 par value, 500
shares authorized - - Common stock, $.10 par value, 25,500 shares
authorized
10,641 and 10,579 shares issued and 9,832
and 9,772shares outstanding at December 31 and March 31, 2018,
respectively 1,064 1,058 Capital in excess of par value 24,835
23,826 Retained earnings 99,383 99,011 Accumulated other
comprehensive loss (8,063) (8,250) Treasury stock (809 and 807
shares at December 31 and March 31, 2018, respectively)
(12,410) (12,296)
Total stockholders’ equity
104,809 103,349 Total liabilities and
stockholders’ equity $ 156,761 $
143,333
Graham Corporation
Third Quarter Fiscal 2019
Consolidated Statements of Cash Flows –
Unaudited
(Amounts in thousands)
Nine Months Ended
December 31,
2018 2017 Operating activities:
Net income $ 4,245 $ (10,677)
Adjustments to reconcile net income (loss)
to net cash provided byoperating activities:
Depreciation 1,469 1,490 Amortization 178 177 Amortization of
unrecognized prior service cost and actuarial losses 655 788
Impairment of goodwill and purchased intangible assets - 14,816
Stock-based compensation expense 797 362 Loss on disposal or sale
of property, plant and equipment 30 1 Deferred income taxes 128
(3,498) (Increase) decrease in operating assets: Accounts
receivable 3,050 (5,029) Unbilled revenue (2,011) 5,170 Inventories
1,813 352 Prepaid expenses and other current and non-current assets
(773) (591) Income taxes receivable 770 (1,605) Prepaid pension
asset (893) (770) Increase (decrease) in operating liabilities:
Accounts payable
(8,136) (1,005) Accrued compensation, accrued expenses and other
current and non-current liabilities 946 (1,593) Customer deposits
6,177 5,400 Long-term portion of accrued compensation, accrued
pension liability and accrued postretirement benefits 90
86
Net cash provided by operating activities
8,535 3,874 Investing
activities: Purchase of property, plant and equipment (1,471)
(543) Proceeds from disposal of property, plant and equipment - 1
Purchase of investments (101,343) (34,023) Redemption of
investments at maturity 73,633 30,000
Net cash
used by investing activities (29,181)
(4,565) Financing activities: Principal
repayments on capital lease obligations (81) (78) Issuance of
common stock 171 - Dividends paid (2,851) (2,638) Purchase of
treasury stock (146) (119)
Net cash used by
financing activities (2,907)
(2,835) Effect of exchange rate changes on cash (228)
211 Net decrease in cash and cash equivalents (23,781)
(3,315) Cash and cash equivalents at beginning of year
40,456 39,474 Cash and cash equivalents at end of period $
16,675 $ 36,159
Graham Corporation
Third Quarter Fiscal 2019
Adjusted Net Income Reconciliation –
Unaudited
(Amounts in thousands, except per share
data)
Three Months Ended Nine Months Ended
December 31, December 31, 2018
2017 2018 2017
Per Diluted Share
Per Diluted Share
Per Diluted Share
Per Diluted Share
Net income $ 95 $ 0.01 $
(11,622) $ (1.19) $ 4,245
$ 0.43 $ (10,677) $
(1.09) + Restructuring charge - - - - - - 316 0.03
+ Impairment of goodwill andintangible
assets
- - 14,816 1.52 - - 14,816 1.52
+ Bad debt charge on commercial nuclear
powerbusiness
- - 280 0.03 - - 280 0.03 - Tax effect of above - - (2,037) (0.21)
- - (2,129) (0.22) - Impact of new tax law - -
(1,438) (0.15) - - (1,438)
(0.15)
Adjusted net income $ 95 $
0.01 $ (1) $ (0.00) $
4,245 $ 0.43 $ 1,168 $
0.12
Non-GAAP Financial Measure:
Adjusted net income is defined as GAAP net income excluding a
nonrecurring restructuring charge, impairment of goodwill and
intangible assets, a charge associated with the revaluation of the
nuclear business and the impact of the new tax law in fiscal 2018.
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 Corporation
Third Quarter Fiscal 2019
Adjusted EBITDA Reconciliation –
Unaudited
(Amounts in thousands)
Three Months Ended Nine Months Ended
December 31, December 31, 2018
2017 2018 2017 Net income
$ 95 $ (11,622) $ 4,245
$ (10,677) + Net interest income (399) (139) (1,036)
(447) + Income taxes (56) (3,536) 824 (3,174) + Depreciation &
amortization 548 556 1,647 1,667 + Restructuring charge - - - 316
+ Impairment of goodwill andintangible
assets
- 14,816 - 14,816
+ Bad debt charge oncommercial nuclear
powerbusiness
- 280 - 280
Adjusted EBITDA
$ 188 $ 355 $ 5,680
$ 2,781 Adjusted EBITDA margin % 1.1% 2.1% 8.3% 5.0%
Non-GAAP Financial Measure:
Adjusted EBITDA is defined as consolidated net income before
interest expense and income, income taxes, depreciation and
amortization, a nonrecurring restructuring charge, impairment of
goodwill and intangible assets, and a charge associated with the
revaluation of the nuclear business. 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 Corporation
Third Quarter Fiscal 2019
Additional Information –
Unaudited
ORDER & BACKLOG TREND ($ in millions)
Q118 Q218 Q318 Q418
FY2018 Q119 Q219 Q319
Total Total Total
Total Total Total
Total Total Orders $ 11.1 $ 17.1
$ 40.5 $ 43.5 $ 112.2 $ 22.0 $ 34.4
$ 23.2 Backlog $ 72.9 $ 73.0 $ 96.2 $
117.9 $ 117.9 $ 114.9 $ 127.8 $ 133.7
SALES BY INDUSTRY FY 2019 ($ in millions)
FY 2019 Q1 % of Q2 % of
Q3 % of 6/30/2018
Total 9/30/2018 Total
12/31/2018 Total Refining $ 19.8
67% $ 9.7 45% $ 6.6
39% Chemical/ Petrochemical $ 3.0 10%
$ 3.8 18% $ 2.9 17% Power
$ 3.1 10% $ 2.1 10% $ 2.7
15% Other Commercial, Industrial and Defense $ 3.7
13% $ 5.8 27% $ 5.0
29% Total $ 29.6 $ 21.4
$ 17.2
SALES BY
INDUSTRY FY 2018 ($ in millions)
FY 2018
Q1 % of Q2 % of Q3 % of
Q4 % of FY2018 % of
6/30/2017 Total 9/30/2017
Total 12/31/2017
Total 3/31/2018 Total
Total Refining $ 3.6 18%
$ 4.7 28% $ 5.4 31%
$ 7.9 35% $ 21.6 28% Chemical/
Petrochemical $ 7.2 34% $ 5.7
33% $ 4.2 24% $ 3.6 16%
$ 20.7 27% Power $ 4.0 19% $ 1.9
11% $ 1.7 10% $ 3.2
14% $ 10.8 14% Other Commercial,
Industrial and Defense $ 6.1 29% $ 4.9
28% $ 6.0 35% $ 7.4
35% $ 24.4 32% Total $ 20.9
$ 17.2 $ 17.3 $
22.1 $ 77.5
Graham Corporation
Third Quarter Fiscal 2019
Additional Information –
Unaudited
(Continued)
SALES BY REGION FY 2019 ($ in millions)
FY 2019 Q1 % of Q2 %
of Q3 % of
6/30/2018 Total 9/30/2018
Total 12/31/2018
Total United States $ 13.5 46% $
15.0 70% $ 14.3 83% Middle East
$ 0.4 1% $ 0.5 2% $ 0.8 5% Asia
$ 2.7 9% $ 1.9 9% $ 1.0
6% Other $ 13.0 44% $ 4.0
19% $ 1.1 6% Total $ 29.6
$ 21.4 $ 17.2
SALES BY REGION FY 2018 ($ in millions)
FY
2018 Q1 % of Q2 % of Q3 %
of Q4 % of FY2018 % of
6/30/2017 Total
9/30/2017 Total
12/31/2017 Total
3/31/2018 Total
Total United States $ 14.8 71% $
11.1 65% $ 11.3 65% $ 14.7 66%
$ 51.9 67% Middle East $ 0.9 4%
$ 1.0 6% $ 1.0 6% $ 0.9
4% $ 3.8 5% Asia $ 3.4 16%
$ 2.6 15% $ 2.3 13% $ 1.9
9% $ 10.2 13% Other $ 1.8 9%
$ 2.5 14% $ 2.7 16% $ 4.6
21% $ 11.6 15% Total $ 20.9
$ 17.2 $ 17.3
$ 22.1 $ 77.5
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190130005132/en/
For more information contact:Jeffrey F. GlajchVice
President – Finance and CFOPhone: (585)
343-2216jglajch@graham-mfg.comorDeborah K. Pawlowski / Karen L.
HowardKei Advisors LLCPhone: (716) 843-3908 / (716)
843-3942dpawlowski@keiadvisors.com / khoward@keiadvisors.com
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