Overview

• U.S. industrial equipment maker's Q4 revenue rose 13% yr/yr to record high

• Q4 adjusted EPS fell to $0.33; adjusted EBITDA declined to $6.8 mln

• Gross margin and operating income declined due to less favorable sales mix and acquisition costs

Outlook

• Graham sees fiscal 2027 net sales between $285 mln and $295 mln

• Company expects fiscal 2027 adjusted EBITDA of $35 mln to $40 mln

• Graham expects favorable long-term market fundamentals to support future growth

Result Drivers

• DEFENSE MARKET STRENGTH - Q4 sales growth was primarily driven by continued strength in the Defense market, with strong program execution and demand across key naval defense platforms

• FLACKTEK ACQUISITION - The FlackTek acquisition contributed to revenue growth but also added lower-margin sales and increased SG&A costs due to purchase accounting adjustments and integration expenses

• SPACE MARKET MOMENTUM - Space market revenue increased 14% year-over-year due to the ramp up of existing programs

Company press release: ID:nBw50L8W4a

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q4 Sales		$67.08 mln
Q4 Adjusted EPS		$0.33
Q4 EPS		$0.18
Q4 Net Income		$1.97 mln
Q4 Adjusted EBITDA		$6.82 mln
Q4 Gross Margin		22.70%
Q4 Operating Income		$2.66 mln

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 4 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the industrial machinery & equipment peer group is "buy"

• Wall Street's median 12-month price target for Graham Corp is $100.00, about 6.6% below its June 5 closing price of $107.10

• The stock recently traded at 53 times the next 12-month earnings vs. a P/E of 42 three months ago

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