Graham Corporation Reports Third Quarter Fiscal 2026 Results

BATAVIA, N.Y.--( BUSINESS WIRE)--Graham Corporation (NYSE: GHM) (“GHM” or the “Company”), a global leader in the design and manufacture of mission critical fluid, power, heat transfer, vacuum, and advanced mixing technologies for the Defense, Energy & Process, and Space industries, today reported financial results for its third quarter for the fiscal year ending March 31, 2026 (“fiscal 2026”).

Graham’s President and Chief Executive Officer, Matthew J. Malone stated, “Our third quarter results reflect continued strong, disciplined execution across the organization as we progress through the back half of fiscal 2026. Revenue growth and profitability were driven by solid performance across our end markets and supported by a record backlog, which provides meaningful visibility into future demand. Activity in our Defense market remains robust, while the Energy & Process and Space markets continue to perform in line with our expectations.”

Mr. Malone continued, “As we move through the remainder of the fiscal year, we remain focused on disciplined execution, operational efficiency, and advancing strategic initiatives that strengthen our competitive position. We continue to invest in automation, advanced testing, and new technical capabilities that enhance productivity and support margin expansion. In addition, the recent acquisition of FlackTek in January 2026 meaningfully expands our technology portfolio and further positions Graham to deliver differentiated, mission-critical solutions to our core end markets.”

1 Adjusted net income per diluted share, Adjusted EBITDA, and Adjusted EBITDA margin are non-GAAP measures. See attached tables and other information for important disclosures regarding Graham’s use of these non-GAAP measures.

2 Orders, backlog, and book-to-bill ratio are key performance metrics. See “Key Performance Indicators” below for important disclosures regarding Graham’s use of these metrics.

Third Quarter Fiscal 2026 Performance Review

(All comparisons are with the same prior-year period unless noted otherwise.)

56,701

47,037

9,664

21%

178,215

150,551

27,664

18%

13,469

11,686

1,783

15%

42,496

36,853

5,643

15%

23.8%

24.8%

-100 bps

23.8%

24.5%

-70 bps

3,124

2,210

914

41%

12,359

9,669

2,690

28%

5.5%

4.7%

+80 bps

6.9%

6.4%

+50 bps

2,845

1,588

1,257

79%

10,530

7,835

2,695

34%

5.0%

3.4%

+160 bps

5.9%

5.2%

+70 bps

0.25

0.14

0.11

79%

0.95

0.71

0.24

34%

3,514

1,966

1,548

79%

11,881

8,965

2,917

33%

0.31

0.18

0.13

72%

1.07

0.81

0.26

32%

6,044

4,027

2,017

50%

19,177

14,779

4,398

30%

10.7%

8.6%

+210 bps

10.8%

9.8%

+100 bps

*Graham believes that, when used in conjunction with measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), adjusted net income, adjusted net income per diluted share, adjusted EBITDA, and adjusted EBITDA margin, which are non-GAAP measures, help in the understanding of its operating performance. See attached tables and other information provided at the end of this press release for important disclosures regarding Graham’s use of these non-GAAP measures.

Quarterly net sales of $56.7 million increased 21%, or $9.7 million over the prior year reflecting our diversified revenue base. Sales to the Defense market contributed $8.3 million to growth primarily due to the timing of project milestones, new programs, and growth in existing programs. Sales to the Energy & Process market increased $2.1 million or 13% over the prior year driven by Aftermarket sales, as well as continued momentum in our New Energy markets and in particular small modular reactors (“SMRs”). Aftermarket sales to the Energy & Process and Defense markets totaled $10.8 million for the quarter, 11% above the prior year. See supplemental data for a further breakdown of sales by market and region.

Gross profit for the quarter increased $1.8 million, or 15%, to $13.5 million compared to the prior-year period of $11.7 million. As a percentage of sales, gross profit margin decreased 100 basis points to 23.8%, compared to the third quarter of fiscal 2025. This decrease in gross profit margin reflects the mix of sales during the third quarter of fiscal 2026, and a higher level of material receipts which carry lower profit margins. Additionally, the third quarter and the first nine months of fiscal 2025 gross profit benefited $0.3 million and $1.5 million, respectively, from a grant received in the prior year from the BlueForge Alliance to reimburse the Company for the cost of its defense welder training programs in Batavia, which did not repeat in fiscal year 2026. For the first nine months of fiscal 2026, we estimate the impact of tariffs on our consolidated financial statements to be approximately $1.0 million compared to the prior year and was immaterial for the third quarter of fiscal 2026. For the full fiscal 2026, we now expect the potential impact of tariffs to be between an incremental $1.0 to $1.5 million compared to the prior year.

Selling, general and administrative expense (“SG&A”), including intangible amortization, totaled $10.6 million, an increase of $0.9 million compared with the prior year due to the investments being made in operations, employees, and technology, higher acquisition and integration costs due to the Xdot and FlackTek acquisitions, as well as higher performance-based compensation due to Graham’s increased profitability, which was partially offset by a reversal of bad debt reserves. As a percentage of sales, SG&A, including amortization of 18.6%, decreased 200 basis points compared to the prior year period, reflecting the higher level of sales during the quarter, as well as our continued financial discipline.

Cash Management and Balance Sheet

Cash provided by operating activities totaled $4.8 million for the quarter ended December 31, 2025. As of December 31, 2025, cash and cash equivalents were $22.3 million.

Capital expenditures, net for the third quarter fiscal 2026 were $2.2 million, focused on capacity expansion, increasing capabilities, and productivity improvements.

The Company had no debt outstanding as of December 31, 2025, with $43.0 million available on its revolving credit facility after taking into account outstanding letters of credit.

Orders, Backlog, and Book-to-Bill Ratio

See supplemental data filed with the Securities and Exchange Commission on Form 8-K and provided on the Company’s website for a further breakdown of orders and backlog by market. See “Key Performance Indicators” below for important disclosures regarding Graham’s use of these metrics ($ in millions).

55.8

63.7

24.8

86.9

231.1

125.9

83.2

71.7

280.8

396.8

407.0

384.7

412.3

482.9

500.1

515.6

Orders for the third quarter of fiscal 2026 were $71.7 million. This increase was primarily in the Defense and Space markets, which continue to exhibit strong tail-winds. Energy & Process orders were consistent with prior year levels, as strong demand in New Energy offset weaker Aftermarket orders. Total Aftermarket orders for the third quarter of fiscal 2026 decreased $5.2 million to $8.0 million from the record levels of the prior year.

Note that our orders tend to be lumpy given the nature of our business (i.e. large capital projects) and in particular, orders to the Defense industry, which span multiple years and can be significantly larger in size.

Backlog at quarter end was a record $515.6 million, a 34% increase over the prior-year period, driven by strong bookings including contributions from Xdot of $0.5 million, primarily in the Defense and Space markets. For the quarter, the Company achieved a book-to bill ratio of 1.3x. Approximately 35% to 40% of orders currently in backlog are expected to be converted to sales in the next twelve months, another 25% to 30% are expected to convert to sales within one to two years, and the remaining beyond two years. Approximately 85% of our backlog as of December 31, 2025, was to the Defense industry, which provides stability and visibility to our business.

FlackTek Acquisition

On January 23, 2026, subsequent to the end of the third quarter, Graham acquired FlackTek Manufacturing, LLC and FlackTek Sales, LLC (collectively, “FlackTek”). The acquisition establishes advanced mixing and materials processing as a third core technology platform for Graham, complementing its existing vacuum, heat transfer, and turbomachinery capabilities and further aligning with the Company’s Defense, Energy & Process, and Space end markets.

Under the terms of the transaction, Graham acquired 100% of the equity of FlackTek for a purchase price of $35.0 million, comprised of 85% cash and 15% using 75,818 shares of Graham’s common stock, along with the potential to earn an additional $25 million in future performance-based cash earnouts over four years beginning in fiscal year 2027, based upon achieving progressively increasing adjusted EBITDA performance targets. The base purchase price represents approximately 12x FlackTek’s projected adjusted EBITDA for 2026. The transaction was funded through a combination of cash on-hand and borrowings under the Company’s revolving credit facility.

In connection with the acquisition, Graham amended its revolving credit agreement with Wells Fargo Bank, National Association, increasing the borrowing limit from $50 million to $80 million. Following the closing of the transaction, the Company’s pro forma leverage ratio is approximately 1.2x.

Fiscal 2026 Outlook

Based upon the results for the first nine months of fiscal 2026, our expectations for the remainder of the fiscal year, and inclusive of the acquisition of FlackTek and Xdot, Graham is updating its full year fiscal 2026 guidance as follows:

(as of February 6, 2026)

Fiscal 2026 Guidance (New)

Fiscal 2026 Guidance (Old)

Net Sales

$233 million to $239 million

$225 million to $235 million

Gross Margin (1)

24.0% to 25.0% of sales

24.5% to 25.5% of sales

SG&A expense (including amortization) (2)

17.5% to 18.5% of sales

Adjusted EBITDA (1)(3)

$24 million to $28 million

$22 million to $28 million

Effective Tax Rate

16% to 18%

20% to 22%

Capital Expenditures

$15.0 million to $18.0 million

(1)

Includes the estimated impact of increased tariffs over the prior year of approximately $1.0 million to $1.5 million.

(2)

Includes approximately $7.0 million to $8.0 million of Barber-Nichols supplemental performance bonus, equity-based compensation, acquisition & integration, and enterprise resource planning (“ERP”) conversion costs included in SG&A expense.

(3)

Excludes net interest expense (income), income taxes, depreciation, and amortization from net income, as well as approximately $3.0 million to $4.0 million of equity-based compensation, net acquisition & integration, and ERP conversion costs included in SG&A expense, net.

Graham's Chief Financial Officer, Christopher J. Thome, said, “We are pleased with our performance through the first nine months of fiscal 2026 and continue to see strong demand across most of the markets we serve. Reflecting this momentum, including the contribution from the FlackTek acquisition, we are increasing our full-year fiscal 2026 guidance.

Mr. Thome continued, “After the acquisition of FlackTek, our balance sheet remains strong with low leverage, a modest amount of debt of $20 million, and increased capacity under our line of credit. We believe this increased capacity, along with our strong operating cash flow, provides us ample liquidity to continue to execute our capital allocation strategy and future growth.”

Webcast and Conference Call

GHM’s management will host a conference call and live webcast on February 6, 2026, at 11:00 a.m. Eastern Time (“ET”) to review its financial results 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 GHM’s investor relations website.

A question-and-answer session will follow the formal presentation. GHM’s conference call can be accessed by calling (201)-689-8560. Alternatively, the webcast can be monitored from the events section of GHM’s investor relations website.

A telephonic replay will be available from 3:00 p.m. ET today through Friday, February 13, 2026. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13757532 or access the webcast replay via the Company’s website at ir.grahamcorp.com, where a transcript will also be posted once available.

About Graham Corporation

Graham is a global leader in the design and manufacture of mission critical fluid, power, heat transfer, vacuum, and advanced mixing technologies for the Defense, Energy & Process, and Space industries. Graham Corporation and its family of global brands are built upon world-renowned engineering expertise, proprietary technologies, as well as its responsive and flexible service and the unsurpassed quality customers have come to expect from the Company’s products and systems. Graham Corporation routinely posts news and other important information on its website, grahamcorp.com, where additional information on Graham Corporation and its businesses 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 “continue,” “estimate,” “expects,” “future,” “outlook,” “believes,” “could,” “guidance,” “may”, “will,” 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, profitability of future projects and the business, its ability to deliver to plan, its ability to continue to strengthen relationships with customers in the Defense industry, its ability to secure future projects and applications, expected expansion and growth opportunities, anticipated sales, revenues, adjusted EBITDA, adjusted EBITDA margins, capital expenditures and SG&A expenses, the timing of conversion of backlog to sales, orders, market presence, profit margins, tax rates, foreign sales operations, customer preferences, changes in market conditions in the industries in which it operates, 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, realization of benefits from the acquisition of FlackTek, and the integration and operation of FlackTek 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 (the “SEC”), included under the heading entitled “Risk Factors”, and in other reports filed with the SEC.

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.

Non-GAAP Financial Measures

Adjusted EBITDA is defined as consolidated net income (loss) before net interest expense, income taxes, depreciation, amortization, other acquisition related expenses, equity-based compensation, ERP implementation costs, and other unusual/nonrecurring expenses. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of 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, 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. Moreover, Graham’s credit facility also contains ratios based on Adjusted 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.

Adjusted net income and adjusted net income per diluted share are defined as net income and net income per diluted share as reported, adjusted for certain items and at a normalized tax rate. Adjusted net income and adjusted net income per diluted share are not measures determined in accordance with GAAP, and may not be comparable to the measures as used by other companies. Nevertheless, Graham believes that providing non-GAAP information, such as adjusted net income and adjusted net income per diluted share, is important for investors and other readers of the Company’s financial statements and assists in understanding the comparison of the current quarter’s and current fiscal year's net income and net income per diluted share to the historical periods' net income and net income per diluted share. Graham also believes that adjusted net income per share, which adds back intangible amortization expense related to acquisitions, provides a better representation of the cash earnings of the Company.

Forward-Looking Non-GAAP Measures

Adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures. The Company is unable to present a quantitative reconciliation of these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict the necessary components of such GAAP measures without unreasonable effort largely because forecasting or predicting our future operating results is subject to many factors out of our control or not readily predictable. In addition, the Company believes that such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on the Company’s fiscal 2026 financial results. These non-GAAP financial measures are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with purchase accounting, quarter-end, and year-end adjustments. Any variation between the Company’s actual results and preliminary financial estimates set forth above may be material.

Key Performance Indicators

In addition to the foregoing non-GAAP measures, management uses the following key performance metrics to analyze and measure the Company’s financial performance and results of operations: orders, backlog, and book-to-bill ratio. Management uses orders and backlog as measures of current and future business and financial performance, and these may not be comparable with measures provided by other companies. Orders represent definitive agreements with customers to provide products and/or services. Backlog is defined as the total dollar value of net orders received for which revenue has not yet been recognized. Total backlog can include both funded and unfunded orders under government contracts. Management believes tracking orders and backlog are useful as they often times are leading indicators of future performance. In accordance with industry practice, contracts may include provisions for cancellation, termination, or suspension at the discretion of the customer.

The book-to-bill ratio is an operational measure that management uses to track the growth prospects of the Company. The Company calculates the book-to-bill ratio for a given period as net orders divided by net sales.

Given that each of orders, backlog, and book-to-bill ratio are operational measures and that the Company's methodology for calculating orders, backlog and book-to-bill ratio does not meet the definition of a non-GAAP measure, as that term is defined by the U.S. Securities and Exchange Commission, a quantitative reconciliation for each is not required or provided.

Consolidated Statements of Operations - Unaudited

($ in thousands, except per share data)

Three Months Ended

Nine Months Ended

December 31,

2025

2024

% Change

2025

2024

% Change

56,701

47,037

21%

178,215

150,551

18%

43,232

35,351

22%

135,719

113,698

19%

13,469

11,686

15%

42,496

36,853

15%

23.8

24.8

23.8

24.5

10,129

9,260

29,315

26,821

435

436

(0%)

1,308

1,309

(0%)

(219

)

(220

)

(0%)

(486

)

(946

)

(49%)

3,124

2,210

41%

12,359

9,669

28%

5.5

4.7

6.9

6.4

(1%)

334

273

22%

(169

)

(128

)

32%

(414

)

(442

)

(6%)

3,203

2,247

43%

12,439

9,838

26%

358

659

(46%)

1,909

2,003

(5%)

2,845

1,588

79%

10,530

7,835

34%

0.26

0.15

73%

0.96

0.72

33%

0.25

0.14

79%

0.95

0.71

34%

10,988

10,890

10,967

10,880

11,157

11,057

11,108

11,016

Consolidated Balance Sheets

(Amounts in thousands, except per share data)

December 31,

March 31,

2025

22,254

21,577

31,704

35,507

57,823

38,494

48,523

40,025

3,491

4,249

1,520

163,814

141,372

57,321

50,649

6,055

5,950

5,587

6,386

26,181

25,520

12,304

13,159

10,383

10,310

6,783

6,858

1,531

1,502

2,968

2,404

292,927

264,110

17,509

27,309

18,503

19,161

4,530

4,322

111,984

84,062

1,460

1,275

660

154,669

136,150

4,544

5,514

1,191

1,192

1,112

1,633

161,617

144,533

1,116

1,107

35,260

34,616

104,759

94,229

(6,437

)

(6,987

)

(3,388

)

(3,388

)

131,310

119,577

292,927

264,110

Consolidated Statements of Cash Flows

(Amounts in thousands)

Nine Months Ended

December 31,

2025

2024

10,530

7,835

3,670

2,712

1,507

1,663

(369

)

630

586

1,727

1,204

(38

)

(486

)

(946

)

(39

)

(91

)

4,169

9,394

(19,308

)

(9,879

)

(8,474

)

(5,628

)

(1,665

)

1,501

(46

)

1,011

965

(105

)

(175

)

(6,690

)

3,914

(551

)

(1,380

)

27,830

21,000

562

(646

)

(995

)

(948

)

16,084

27,873

(13,482

)

(13,800

)

154

(895

)

(170

)

(14,223

)

(13,970

)

(8,000

)

8,000

(251

)

(237

)

458

334

(1,532

)

(854

)

(1,325

)

(757

)

141

(39

)

677

13,107

21,577

16,939

22,254

30,046

Adjusted EBITDA Reconciliation

(Unaudited, $ in thousands)

Three Months Ended

Nine Months Ended

December 31,

2025

2024

2025

2024

2,845

1,588

10,530

7,835

320

(220

)

157

(900

)

157

704

(169

)

(128

)

(414

)

(442

)

358

659

1,909

2,003

642

426

1,727

1,204

2,009

1,545

5,177

4,375

6,044

4,027

19,177

14,779

56,701

47,037

178,215

150,551

5.0

3.4

5.9

5.2

10.7

8.6

10.8

9.8

Adjusted Net Income and Adjusted Net Income per Diluted Share Reconciliation

(Unaudited, $ in thousands, except per share amounts)

Three Months Ended

Nine Months Ended

December 31,

2025

2024

2025

2024

2,845

1,588

10,530

7,835

320

(220

)

157

(900

)

510

554

1,507

1,663

157

704

(200

)

(113

)

(404

)

(337

)

3,514

1,966

11,881

8,965

0.25

0.14

0.95

0.71

0.31

0.18

1.07

0.81

11,157

11,057

11,108

11,016

Acquisition and integration (income) costs, net are incremental costs that are directly related to and as a result of the P3, Xdot, and FlackTek acquisitions or the subsequent accounting for the related contingent earn-out liabilities. These costs (income) may include, among other things, professional, consulting and other fees, system integration costs, and contingent consideration fair value adjustments. ERP implementation costs primarily relate to consulting costs (training, data conversion, and project management) incurred in connection with the ERP system being implemented throughout our Batavia, New York facility in order to enhance efficiency and productivity and are not expected to recur once the project is completed.