After eight months of ownership, what specific wins or opportunities have arisen from FLACTECH's integration, either with legacy Graham customers or from being under a larger company?

FLACTECH's book-to-bill ratio of 2.0x reflects strong support. Opportunities are emerging in advanced space applications, particularly adhesives for critical components, and in missile production, especially solid rocket motors. The technology is seen as game-changing compared to bladed mixing, with aerospace and defense being key areas. “The short of it is, they really are changing the game versus versus bladed mixing. So you got to see it in person at the investor day, I recall, and we're seeing that across a bunch of different end markets. I would say aerospace and defense and space specifically are where we're seeing the most opportunity right now.”

To what extent were the recent large awards to General Dynamics and Huntington Ingalls already in Graham's backlog, and what are the implications for future orders from these programs?

It's a mix of both, some in backlog, some not. The awards confirm the strategic and long-term nature of these programs. Graham feels well-positioned to benefit from the tailwinds and desire to accelerate submarine production, with investments being well-received and a strong pipeline for additional orders. “The reality for us is it's just more of a confirmation of how strategic these programs are in long term. We continue to feel the tailwinds and the desire to accelerate submarine production, and we think we're going to do that. well positioned.”

What were the drivers behind the 230 basis point sequential increase in gross margin from Q4 FY26 to Q1 FY27?

The sequential improvement largely correlates with the mix of sales. While Q1 FY27 had 58% defense revenue (a lower-margin business) compared to 60% in Q4 FY26, it was an improvement from 53% in the prior year's Q1. The prior quarter (Q4 FY26) also had impacts from initial purchase accounting adjustments for FLACTECH. “But largely, if you look at our margin, quarter over quarter and all the variances it directly correlates you know with the mix of defense so you know we had about 58 percent of of our revenue this quarter was in defense versus 60 in the fourth quarter, but versus 53% last year.”

GHM

Graham (GHM) Q1 FY27 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q1 FY27)· Industrials· Aug 6, 2026

Source: earnings call transcript

Executive summary

Graham Corporation Q1 FY27 — Record Revenue and Backlog Driven by Defense and Space Momentum

Graham Corporation delivered a strong start to fiscal 2027, achieving record revenue and backlog, primarily fueled by robust demand in its defense and space segments. The company's strategic investments in capacity and capabilities are beginning to yield results, positioning it for sustained profitable growth. Management remains confident in its full-year guidance and long-term financial framework, emphasizing operational execution and disciplined capital allocation.

Highlights

Record first quarter revenue of $71.3 million, an increase of 29% year-over-year.
Adjusted EBITDA increased 28% to $8.8 million, with an adjusted EBITDA margin of 12.3%.
Record backlog of $557 million, marking the sixth consecutive quarter of record backlog.
Defense revenue increased 40% year-over-year, driven by project milestones and new program activity.
Space revenue increased 86% year-over-year, reflecting new and ramping programs, with a book-to-bill of 2.3x.

Concerns

Gross profit margin decreased to 25% from 26.5% in the prior year, primarily due to a higher mix of lower-margin defense revenue.
Net cash used by operating activities was $12.7 million, reflecting timing of billing/collections and bonus payments.
Energy and Process revenue growth was limited to 5% due to ongoing pushouts in large capital projects, despite aftermarket strength.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Revenue	$285 million to $295 million high materiality	FY27	High
Full-year Gross Margin	24.5% to 25.5% medium materiality	FY27	High
Full-year SG&A Expenses as % of Sales	16.5% to 17.5% medium materiality	FY27	High
Full-year Adjusted EBITDA	$35 million to $40 million high materiality	FY27	High
Full-year Capital Expenditures	$18 million to $22 million medium materiality	FY27	High
Organic Revenue Growth	8% to 10% annually high materiality	Next several years · FY29	High
Adjusted EBITDA Margin	14% to 16% high materiality	FY29	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Defense Revenue growth driven by timing of project milestones, new program activity, and continued growth across existing programs, including Columbia and Virginia-class submarine programs and MK-48 Mod 7 torpedo program. New and follow-on orders: $61.8MMK-19 Mod 2 air turbine pump assemblies contract: $43M	$40.0M	40%	—	—
Space Revenue growth reflects new programs, continued ramp of existing programs, and contributions from FLACTECH. Customers are advancing from development to production, increasing demand for highly engineered components. Orders: $14.4MBook-to-bill: 2.3x	$14.4M	86%	—	—
Energy and Process Continued strength in aftermarket activity and FLACTECH contributions helped offset ongoing pushouts in large capital projects within refining and petrochemical markets. New Energy engagement is increasing in SMRs and cryogenic applications. Aftermarket revenue (across E&P and Defense): 20% YoY growth	$16.9M	5%	—	—
FLACTECH FLACTECH's first quarter bookings reflect healthy customer engagement and attractive growth characteristics, bringing differentiated IP and recurring revenue. Integration is progressing well, with focus on commercialization of the Mega Platform. Orders: $13.3MBook-to-bill: 2.0x	$6.6M	—	—	—

GHM operating KPIs by quarter

GHM operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q4 FY26	This call Jun 2026 Q1 FY27	Change vs prior quarter
Orders	$78.7M Fourth quarter orders were 78.7 million, resulting in a book-to-bill ratio of 1.2 times. Source: earnings call transcript	$96M First quarter orders were 96 million, resulting in a book-to-bill ratio of 1.3 times. Source: earnings call transcript	+22%
Book-to-bill ratio	1.2 ratio Fourth quarter orders were 78.7 million, resulting in a book-to-bill ratio of 1.2 times. Source: earnings call transcript	1.3 ratio First quarter orders were 96 million, resulting in a book-to-bill ratio of 1.3 times. Source: earnings call transcript	+8.3%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total Backlog $557M Q1 FY27 end

15% increase YoY

Expected to convert 35-40% into revenue over next 12 months, and 20-25% the following year.

Company-wide Book-to-Bill Ratio 1.3x Q1 FY27

Follows 1.5x book-to-bill for FY26, demonstrating continued momentum.

Deals & partnerships

T. Rowe Price Strategic investment $50M

Investment from accounts advised by T. Rowe Price, announced previously.

Capital programs

New 30,000 sq ft Manufacturing Facility underway

Benefit:Increased capacity for turbomachinery applications

Construction on Arvada campus to support increasing customer demand and scale production.

Batavia Navy and X-ray Facilities operational

Benefit:Improved throughput, enhanced quality, increased production requirements

Operational and supporting production for critical Navy platforms.

Automated Welding Systems commissioned

Benefit:Improved throughput, enhanced quality, increased production requirements

Commissioned and supporting production for critical Navy platforms.

Assembly and Testing Capabilities operational

Benefit:Increased production requirements, integration-ready solutions

Expanded in Colorado, increasingly supporting production.

Cryogenic Testing Facility operational

Benefit:Ability to validate complex products, reduce program risk

Expanded in Florida, actively supporting customer programs.

ERP System Modernization operational

Benefit:Improved operational performance

Modernization efforts are operational and contributing to performance.

Risks & headwinds

Mix of sales impacting gross margin Q1 FY27

Gross profit margin decreased to 25% from 26.5% YoY, primarily due to higher defense revenue mix.

Mitigation:Focus on achieving a more balanced business mix (closer to 50-50 commercial/defense) over time, operational improvements, automation investments, productivity initiatives.

Pushouts in large capital projects Ongoing

Offsetting continued strength in aftermarket activity and FLACTECH, limiting Energy & Process revenue growth to 5%.

Mitigation:Leveraging aftermarket strength, expanding lifecycle support, introducing new technologies to installed base, and deepening customer relationships. Investing in New Energy technologies.

Cyclicality in Q3 revenue due to holidays Fiscal Q3 annually

Typically the lowest revenue quarter due to two holidays impacting direct labor.

Mitigation:Acknowledged as a normal business cycle, no specific mitigation stated beyond awareness.

What to watch in Q2 FY27

Space segment revenue run rate

Next quarter

Current $14.4M in Q1 FY27

Target Sustained at current run rate or higher

Why it matters

Management stated the current run rate is the 'new norm' for the space business, indicating structural growth.

Our space business, just like our other businesses, the orders can be very lumpy. So we don't expect this level every quarter. But the current run rate of revenue for the quarter is the new norm. So you could expect that going forward.

Find out whether GHM delivers this. Inve re-checks your case every morning.

Q&A highlights

Is the 86% YoY growth in the Space segment structural or just timing, and what specific end markets are driving it?

The strong growth reflects a structural change that began last year, with development programs transitioning into production volumes. While orders can be lumpy, the current revenue run rate is the new norm. The growth is driven by the continuation of these programs ramping up.

“Our space business, just like our other businesses, the orders can be very lumpy. So we don't expect this level every quarter. But the current run rate of revenue for the quarter is the new norm. So you could expect that going forward.”

asked by Robert Brooks · answered by Christopher Thome

2 min read 6 chapters

Detailed narrative

Strategic Investments Bearing Fruit

Graham's multi-year investments in capacity expansion, engineering capabilities, automation, and advanced testing infrastructure are now operational and contributing to performance. These initiatives include the Batavia Navy and X-ray facilities, automated welding systems, assembly and test capabilities in Colorado, cryogenic testing in Florida, and ERP system modernization.

The company is now focused on increasing utilization, shortening production cycle times, and driving greater operational leverage from these assets.

Defense Market Strength and Diversification

Defense revenue surged 40% year-over-year, driven by project milestones and new program activity, particularly in the Columbia and Virginia-class submarine programs and the MK-48 Mod 7 torpedo. New orders totaled approximately $61.8 million, including a $43 million contract for MK-19 Mod 2 air turbine pump assemblies.

Beyond traditional Navy business, Graham is seeing attractive opportunities in next-generation defense applications like radar and directed energy systems, where its thermal management and turbomachinery technologies provide meaningful advantages and higher margins.

Space Segment Momentum and Production Ramp

The Space segment experienced significant momentum, with revenue increasing 86% and orders totaling $14.4 million, resulting in a 2.3x book-to-bill ratio. This growth is attributed to new programs transitioning from development to production and the continued ramp of existing programs.

Investments in testing and manufacturing capabilities, such as liquid nitrogen testing and the cryogenic testing facility in Florida, are strengthening Graham's competitive position as these programs scale across launch vehicles, satellites, and lunar exploration systems.

FLACTECH Integration and Strategic Contribution

The integration of FLACTECH is progressing well, establishing advanced materials processing as Graham's third core technology platform. FLACTECH contributed $6.6 million in revenue and $13.3 million in orders during the quarter, achieving a 2.0x book-to-bill ratio. The business brings differentiated intellectual property, recurring revenue, and exposure to markets where Graham has existing relationships, with particular excitement around the commercialization potential of the Mega Platform in aerospace and defense applications.

Aftermarket Strength and Energy & Process Dynamics

Aftermarket revenue across Energy & Process and Defense increased 20% year-over-year, demonstrating the value of Graham's installed base of over $1 billion. This strength helped offset ongoing pushouts in large capital projects within the refining and petrochemical markets, where revenue increased 5%.

High refinery utilization rates (around 96% in North America) are driving demand for emergency aftermarket services and efficiency improvements, as facilities operate at peak capacity.

Disciplined Capital Allocation and Future Growth

Graham maintains a strong balance sheet with $27 million cash on hand and $75 million available under its revolving credit facility, providing flexibility for strategic growth. Capital expenditures totaled $2.6 million in Q1, focused on capacity expansion and productivity. The company evaluates investments against a 20% ROIC hurdle rate and is constructing a new 30,000 square foot manufacturing facility in Arvada to support growing turbomachinery demand, aligning with its long-term goal of achieving top-quartile financial performance.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.