Graham Corporation Reports Second Quarter Fiscal 2027 Results
GRAHAM CORP (GHM) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 News Release Graham Corporation ¨ 20 Florence Avenue ¨ Batavia, NY 14020 IMMEDIATE RELEASE Graham Corporation Reports Second Quarter Fiscal 2027 Results Second Quarter Fiscal 2027 Highlights: • Net sales of $69.8 million, increased 6% compared to the prior year refle
How this was made
The 30-second read
Why it matters
Earnings beat and reaffirmed guidance support a short‑term bullish stance, but rising expenses warrant caution.
Market read
Strong Q2 results may lift related industrial stocks while highlighting sector demand trends.
What to watch
Higher SG&A and integration costs could pressure cash flow in the coming quarters.
Graham Corporation Reports Second Quarter Fiscal 2027 Results
Second-quarter net sales increased 6%, while gross profit increased 38%, GAAP diluted EPS increased 39%, adjusted EBITDA increased 64%, and backlog reached a record $561.3 million. The company reaffirmed full-year net sales and adjusted EBITDA guidance while raising gross-margin guidance and lowering capital-expenditure guidance.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, Q2 FY27GAAP | $69.76M | – | 6% |
| Net sales, YTD FY27GAAP | $141.1M | – | 16% |
| Cost of products sold, Q2 FY27GAAP | $50.09M | – | (3%) |
| Cost of products sold, YTD FY27GAAP | $103.6M | – | 12% |
| Gross profit, Q2 FY27GAAP | $19.67M | – | 38% |
| Gross profit, YTD FY27GAAP | $37.47M | – | 29% |
| Gross margin, Q2 FY27GAAP | 28.2% | – | 650 bps |
| Gross margin, YTD FY27GAAP | 26.6% | – | 270 bps |
| Selling, general and administrative expense, Q2 FY27GAAP | $13.15M | – | 34% |
| Selling, general and administrative amortization, Q2 FY27GAAP | $507K | – | 16% |
| Operating income, Q2 FY27GAAP | $5.83M | – | 37% |
| Operating income, YTD FY27GAAP | $9.98M | – | 8% |
| Operating margin, Q2 FY27GAAP | 8.4% | – | 190 bps |
| Operating margin, YTD FY27GAAP | 7.1% | – | -50 bps |
| Net income, Q2 FY27GAAP | $4.64M | – | 50% |
| Net income, YTD FY27GAAP | $8.55M | – | 11% |
| Net income margin, Q2 FY27GAAP | 6.6% | – | 190 bps |
| Diluted net income per share, Q2 FY27GAAP | $0.39 | – | 39% |
| Diluted net income per share, YTD FY27GAAP | $0.73 | – | 6% |
| Adjusted net income, Q2 FY27non-GAAP | $6.17M | – | 80% |
| Adjusted net income, YTD FY27non-GAAP | $11.91M | – | 42% |
| Adjusted net income per diluted share, Q2 FY27non-GAAP | $0.52 | – | 68% |
| Adjusted net income per diluted share, YTD FY27non-GAAP | $1.01 | – | 35% |
| Adjusted EBITDA, Q2 FY27non-GAAP | $10.30M | – | 64% |
| Adjusted EBITDA, YTD FY27non-GAAP | $19.05M | – | 45% |
| Adjusted EBITDA margin, Q2 FY27non-GAAP | 14.8% | – | 530 bps |
| Adjusted EBITDA margin, YTD FY27non-GAAP | 13.5% | – | 270 bps |
| Orders, Q2 FY27other | $73.7M | – | – |
| Backlog, Q2 FY27other | $561.3M | – | 12% |
| Book-to-bill ratio, Q2 FY27other | 1.1x | – | – |
| Book-to-bill ratio, first six months of fiscal 2027other | 1.2x | – | – |
| Cash provided by operating activities, Q2 FY27GAAP | $46.7M | – | – |
| Net cash provided by operating activities, YTD FY27GAAP | $34.07M | – | – |
| Capital expenditures, net, Q2 FY27GAAP | $2.2M | – | – |
| Capital expenditures, net, first six months of fiscal 2027GAAP | $4.9M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Aftermarket sales to the Energy & Process and Defense marketsSales decreased 3% from the prior-year quarter but remained at high levels. | $8.6M | – | (3%) |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fiscal 2027 Outlook (as of November 5, 2026) outlook
- Revenue$285 million to $295 million
- Gross margin25.0% to 26.0% of sales
- Operating expenses17.5% to 18.5% of sales
- Tax rate18% to 20%
- NoteAdjusted EBITDA: $35 million to $40 million
- NoteCapital Expenditures: $15.0 million to $20.0 million
- NoteSG&A expense includes approximately $4.5 million to $5.5 million of equity-based compensation, net acquisition & integration costs, and enterprise resource planning (“ERP”) conversion costs.
- NoteGuidance includes approximately $2.5 million of incremental costs to invest in people, processes, and technology to enable future growth and accelerate the commercialization of Graham products and technologies.
- NoteAdjusted EBITDA excludes approximately $6.0 million to $7.0 million of equity-based compensation, net acquisition & integration costs, and ERP conversion costs.
Capital returns
- Issuance of common stock was $50,517 (in thousands) during the six months ended September 30, 2026.
- Tax withholdings related to net share settlements of restricted stock units were $(2,731) (in thousands) during the six months ended September 30, 2026.
What drove it
- FlackTek contributed $9.5 million of revenue in the quarter.
- Defense sales increased $5.1 million, or 12%, driven by the timing of project milestones, new programs, growth of existing programs and capacity, and the addition of FlackTek.
- Defense represented 66% of net sales for the quarter.
- Space sales increased $2.4 million, or 59%, primarily due to commercialization and accelerated launch cadences, the ramp up of existing programs, and the FlackTek acquisition.
- Gross-margin expansion reflected operational improvements on new and existing programs, FlackTek, and the current sales mix in the Space and Defense markets.
- Approximately 83% of backlog as of September 30, 2026, was to the Defense market.
- Space market orders totaled $10.6 million, or 1.7x net Space sales for the quarter, and $25.0 million, or 2.0x net Space sales, for the first six months of fiscal 2027.
- Total Aftermarket orders for the Energy & Process and Defense markets increased 91% to $18.3 million for the second quarter of fiscal 2027.
Concerns
- Energy & Process sales decreased $3.7 million, or 17%, primarily due to softness in investment in large capital projects caused by geopolitical uncertainties and decreased sales to customers outside the U.S.
- The Defense sales increase was partially offset by approximately $10.0 million of lower material receipts in the second quarter of fiscal 2027.
- SG&A, including intangible amortization, increased $3.4 million, or 34%, over the prior-year quarter, including $0.7 million of acquisition and integration expenses and $2.3 million of incremental SG&A from FlackTek.
- Operating margin for the first six months of fiscal 2027 was 7.1%, compared with 7.6% in the prior-year period.
- Orders were $73.7 million in the second quarter of fiscal 2027, compared with $83.2 million in the prior-year second quarter.
What to watch
- Management expects approximately 30% to 35% of backlog to convert to sales within the next twelve months, 20% to 25% within one to two years, and the remainder beyond two years.
- Defense backlog was up 10% and Space backlog was up 108% from the prior-year period.
- The company cited the successful completion of its first customer test at its new cryogenic testing facility and the groundbreaking of its new facility in Arvada.
- Fiscal 2027 gross-margin guidance increased to 25.0% to 26.0% of sales from 24.5% to 25.5% of sales.
- Fiscal 2027 SG&A-expense guidance increased to 17.5% to 18.5% of sales from 16.5% to 17.5% of sales.
- Fiscal 2027 capital-expenditure guidance decreased to $15.0 million to $20.0 million from $18.0 million to $22.0 million.
Balance sheet and cash flow
- Cash and cash equivalents were $71.4 million as of September 30, 2026, compared with $27.0 million at the end of the previous quarter and $6.6 million at March 31, 2026.
- Cash and cash equivalents were $71,427 (in thousands) at September 30, 2026, compared with $6,580 (in thousands) at March 31, 2026.
- The company had no debt outstanding as of September 30, 2026, compared with long-term debt of $13,000 (in thousands) at March 31, 2026.
- $74.7 million was available under the revolving credit facility as of September 30, 2026.
- Customer deposits were $129,655 (in thousands) at September 30, 2026, compared with $102,421 (in thousands) at March 31, 2026.
- Net cash provided by operating activities was $34,070 (in thousands) for the six months ended September 30, 2026, compared with $11,324 (in thousands) in the prior-year period.
- Net cash used by investing activities was $(3,797) (in thousands) for the six months ended September 30, 2026, compared with $(11,148) (in thousands) in the prior-year period.
- Net cash provided by financing activities was $34,473 (in thousands) for the six months ended September 30, 2026, compared with net cash used of $(1,239) (in thousands) in the prior-year period.
Analysis
Graham reported a strong second quarter of fiscal 2027, with net sales of $69,760 (in thousands), up 6%, and substantially faster profit growth. Gross profit increased 38% to $19,673 (in thousands), gross margin expanded 650 basis points to 28.2%, and operating income increased 37% to $5,832 (in thousands). GAAP net income increased 50% to $4,637 (in thousands), while GAAP diluted EPS increased 39% to $0.39. Adjusted EBITDA increased 64% to $10,303 (in thousands) and adjusted EBITDA margin expanded 530 basis points to 14.8%.
The revenue mix favored Defense and Space. Defense sales increased $5.1 million, or 12%, and represented 66% of quarterly net sales. Space sales increased $2.4 million, or 59%. FlackTek contributed $9.5 million of quarterly revenue and was also cited as a contributor to gross-margin expansion. Energy & Process sales decreased $3.7 million, or 17%, as large-project investment softened amid geopolitical uncertainties and sales to customers outside the U.S. declined. Aftermarket sales of $8.6 million decreased 3% but remained at high levels.
Margin gains came from operational improvements, the FlackTek contribution, and the mix of Space and Defense programs, as well as a prior-year comparison affected by high material receipts carrying lower margins. SG&A, including intangible amortization, increased $3.4 million, or 34%, reflecting $0.7 million of acquisition and integration expense, $2.3 million of incremental FlackTek SG&A, and ongoing investment in people, processes and technology. For the first six months, operating margin was 7.1%, below 7.6% in the prior-year period, despite gross-margin expansion.
Cash generation and the balance sheet improved materially. The company generated $46.7 million of cash provided by operating activities in the second quarter and $34,070 (in thousands) in the first six months. Cash and cash equivalents reached $71.4 million, no debt was outstanding, and revolving-credit availability was $74.7 million. Customer deposits were $129,655 (in thousands) at September 30, 2026, compared with $102,421 (in thousands) at March 31, 2026.
Demand visibility remains a central strength. Backlog reached a record $561.3 million, up 12% from the prior-year period and marking the seventh consecutive quarter of record quarterly backlog. Defense comprised approximately 83% of backlog, while Space backlog was up 108%. Quarterly orders of $73.7 million were below $83.2 million in the prior-year quarter, though the book-to-bill ratio was 1.1x and total Aftermarket orders increased 91% to $18.3 million.
The company reaffirmed fiscal 2027 net-sales guidance of $285 million to $295 million and adjusted EBITDA guidance of $35 million to $40 million. It increased gross-margin guidance to 25.0% to 26.0% of sales, increased SG&A guidance to 17.5% to 18.5% of sales, and reduced capital-expenditure guidance to $15.0 million to $20.0 million. Management attributed the gross-margin update to mix and better execution, the SG&A update to higher acquisition and integration-related expenses, and the capital-expenditure update to the timing of major projects.
Management, verbatim
Our second quarter results reflect strong execution across the business, highlighted by growth in Defense and Space, significant margin expansion and continued momentum across our end markets. Our record backlog of $561 million provides strong visibility into future growth and reinforces our confidence in the long-term opportunities ahead.
Matthew J. Malone, President and Chief Executive Officer
Our second quarter results demonstrate continued improvement in profitability, with adjusted EBITDA increasing 64% year-over-year and adjusted EBITDA margin expanding 530 basis points. We generated $46.7 million in operating cash flow during the second quarter and ended the quarter with $71.4 million in cash and no outstanding debt, providing significant financial flexibility to support our organic and inorganic growth initiatives.
Christopher J. Thome, Chief Financial Officer
Not in the filing
stated, not guessed- Free cash flow was not reported.
- Dividend declarations or payments were not reported.
- Share repurchases were not reported.
- Current-quarter revenue amounts for the Defense, Space, and Energy & Process markets were not reported as separate line items.
- A Q2 FY27 effective tax rate was not reported.
- Prior-quarter comparisons for income-statement metrics were not reported.
- A previous-release outlook section was not provided for direct reported-results-versus-prior-guidance comparison.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Graham Corporation (NYSE: GHM) designs fluid, power, heat‑transfer and vacuum technologies for defense, space and energy markets.
Ticker impact
GHM reported Q2 FY27 results with 6% sales growth, 38% gross profit increase and reaffirmed full‑year guidance.
likely upward pressure as investors price in stronger margins and record backlog.
The company posted higher revenue, margin expansion and a record $561M backlog, reinforcing its growth outlook.
Market effects
defense and space sectors may see modest buying as Graham's results highlight demand strength.
U.S. equities, particularly industrial and aerospace stocks, could benefit.
Limited; impact confined to niche industrial markets.
Counterpoint
The backlog may mask future execution risk if new programs face delays.
Key entities
- companyGraham Corporation
Industrial manufacturer serving defense, space, and energy sectors.
