Graham Stock Earnings Reports

Graham reported a strong start to fiscal 2026: revenue rose 11% to $55.5M, adjusted EBITDA increased 33% to $6.8M (12.3% margin), and gross margin expanded to 26.5%. Orders were $126M in the quarter, producing a book-to-bill of 2.3x and driving backlog to a record ~$483M (up 22% YoY), ~87% of which is defense-related; management expects ~35%–40% of backlog to convert to revenue over the next 12 months. Key wins include follow-on awards for the Virginia-class submarine program (total $136.5M) and a recent $25.5M MK48 Mod 7 torpedo order (to be booked in Q2). Aftermarket sales were strong (+33% YoY), supporting margin expansion. Strategic and capital investments continue: a 30,000 sq ft Batavia facility (certificate of occupancy received; expected fully operational by end of calendar Q3) with automated welding installed, a cryogenic propellant testing facility in Florida expected to be operational this quarter, and ERP implementation planned by year-end. Graham received partner/customer funding (notably a $2.2M strategic investment plus Graham’s $1.4M contribution for weld evaluation work) and continues to pursue M&A opportunistically to supplement targeted organic growth (8%–10%). Balance sheet: $10.8M cash, no debt, $44.3M available on revolver; capex was $7M this quarter. Management reiterated full-year fiscal 2026 guidance (midpoint implying ~10% revenue growth and ~12% adjusted EBITDA growth) and reiterated fiscal 2027 targets of 8%–10% organic revenue growth and low- to mid-teen adjusted EBITDA margins. Key risks and items to monitor: lumpiness/timing of large defense and capital project awards, potential tariff exposure (management estimates a $2M–$5M full-year impact range), and the timing of larger global capital projects.