Graham (GHM) Q4 FY26 earnings call: guidance and Q&A

Given the recent streak of strong orders, is the company entering a new normal of steadier order flow, or should volatility still be expected?

Management acknowledged the recent strong order performance but cautioned that the business remains susceptible to lumpiness due to large contract sizes. However, diversification across markets is contributing to more stabilized order flow, though significant volatility can still occur.

“I would still say that our business as a whole is susceptible to volatility and lumpiness with regards to orders. As you know, the contracts received could be anywhere from 75 to 100 million dollars.”

asked by Russell Stanley · answered by Matt Malone

With strong momentum in defense and space, will the company relax its ideal revenue mix targets to let these segments grow as much as possible?

Management confirmed they will follow the tailwinds of end markets, allowing the percentage mix to shift as defense and space continue to ramp. They emphasized that their technology is market-agnostic and will be deployed where demand is strongest, while also continuing to invest in the aftermarket and small modular nuclear opportunities within Energy & Process.

“What we're intending to do is follow the tailwinds of the end markets and ensure that our capabilities and technology align to them. And then yes, we will shift that percentage mix as we move forward.”

asked by Russell Stanley · answered by Matt Malone

What major milestones remain for FLAC Tech integration, and will acquisition activity be limited until integration is complete?

FLAC Tech integration is progressing as planned, with a focus on commercialization and market adoption. While the corporate team still supports integration, it's minimizing. The company has a healthy M&A pipeline and, despite current integrations, will continue to pursue disciplined, selective, and accretive acquisition opportunities, supported by strong liquidity.

“We do have a healthy portfolio of businesses that we're looking at for our acquisition portfolio. And what I'll say is, while we need to make sure that we finish solid integration of the current businesses, that doesn't preclude us from continuing to ensure that we follow, one, a disciplined approach, two, an selective approach and as always because our organic pipeline is so strong we want to make sure that it's accretive to the business”

asked by Russell Stanley · answered by Matt Malone

Could management provide more context on the new program wins in defense, including specific programs or drivers?

Management clarified that these are not entirely 'new' programs but rather existing development-phase programs transitioning to production, such as radar platforms and directed energy laser platforms requiring power-dense cooling solutions. They also highlighted the competitively won air turbine pump award for the Columbia-class submarine as a new win.

“These are programs that have been in development phase for a number of years with what I'll call smaller platforms. So think more power dense solutions. And so one I can talk high level about is a radar platform that goes from single direction radar visibility to now 360 degrees on the battlefield.”

asked by Bobby Brooks · answered by Matt Malone

Have the new testing facilities, particularly the cryogenic one, led to new customer conversations or are they primarily for internal testing?

The facilities, including those at Barbara Nichols and the Jupiter Cryogenic Facility, are enabling the company to validate complex designs internally, providing fully-enabled products to customers. This capability is leading to exciting pipeline conversations and proving existing product portfolios, with the potential to offer testing as a service for viable production opportunities.

“Bobby, what we're seeing there is, yes, a mix of exciting pipeline conversations and proving our existing product portfolio. Just to characterize that more broadly, though, the primary reason for investing that facility was to validate our internal solutions before they go to our customer, but we will use it as a service facility for our customers for programs that we see viable production opportunity longer term.”

asked by Bobby Brooks · answered by Matt Malone

What drove the impressive 132% year-over-year growth in space orders, and what is the outlook for FY27?

Space order growth is attributed to both new and existing customers, increasing launch cadences from multiple providers, and Graham's critical equipment on various launch and in-space assets (satellites, lunar landers). The ecosystem is coming to life, with growth from both launch and in-space applications. FLAC Tech's 10% space business will also contribute to FY27 growth.

“The second is now we have the ability to launch additional satellites, astronaut backpacks, lunar landers, etc., etc., and we have content a lot of those end assets. So really it's an ecosystem that's coming to life. It's not just a single end user or end application, if that makes sense.”

asked by Bobby Brooks · answered by Matt Malone

What is driving growth in the subs and carriers segment, considering build rates versus new work and content scopes?

Despite reported headwinds in final integration for naval nuclear, Graham sees no impact on its robust pipeline, as its components (condensers, air turbine pumps) are integrated early in the build process. The company also benefits from a portfolio element including faster-moving munitions replenishment through FLAC Tech and Barbara Nichols, providing a diversified growth architecture.

“In most cases, the condenser that goes on board the submarine or the aircraft carrier that we provide or the air turbine pump, a lot of these are some of the earliest assets that get integrated. And so as soon as the, electric boats and Newport News get their contract awards, typically it's slowing down to us.”

asked by Christopher Glynn · answered by Matt Malone

Could management provide an update on new aftermarket products like the Heliflow Heat Exchanger and NextGen nozzle for EMP ejectors?

Management confirmed that Heliflow and NextGen are integrating well into the ecosystem, creating opportunities for both new sales and in-kind replacements. They highlighted a strategic shift from a reactive to a proactive aftermarket approach, leveraging their billion-dollar installed base to bring modernized equipment and technology, including Heliflow and NextGen, to customers.

“Helaflow, NextGen continue to nurture into the ecosystem quite well. We're seeing a lot of opportunity as we start to talk about next gen with our customers. both selling next gen and then stimulating additional in-kind replacements, we're seeing that be a great conversation starter.”

asked by Christopher Glynn · answered by Matt Malone