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Dec 31, 2021
Graham Q3 2022 Earnings Report
Graham Corporation's Q3 2022 results were impacted by cost overruns in the Batavia facility, despite revenue increase and defense diversification strategy.
Key Takeaways
Graham Corporation reported a 6% increase in revenue to $28.8 million for Q3 2022, driven by the Barber-Nichols acquisition and defense sector growth. However, the company experienced a net loss of $3.7 million, or $0.35 per share, due to labor and material cost overruns on Navy projects at its Batavia facility. The company suspended its dividend and is working to amend its credit facility.
Revenue increased by 6% to $28.8 million, with year-to-date revenue up by 16%.
A diluted loss per share of $0.35 was reported, primarily due to Navy project cost overruns.
Defense revenue accounted for 58% of total revenue, totaling $16.6 million.
Record backlog of $272.6 million, with 77% from the defense industry, and orders of $68 million were recorded.
Graham
Graham
Graham Revenue by Segment
Revenue by Segment
Defense Revenue
CapyFin.com Forward Guidance
Graham Corporation anticipates fiscal year 2022 revenue to be between $120 million and $125 million, which implies revenue of $37 million to $42 million in the fourth quarter. Adjusted EBITDA is expected to be a loss of approximately $5 million, which implies breakeven adjusted EBITDA in the fourth quarter of fiscal 2022.
Positive Outlook
- Revenue expected to be between $37 million and $42 million in Q4
- Barber-Nichols anticipated to contribute $45 million to $48 million in revenue
- Aftermarket business demand has accelerated
- Short-term challenges are being addressed head-on
- Positive momentum with diversification strategy
Challenges Ahead
- Adjusted EBITDA is expected to be a loss of approximately $5 million
- Gross margin for fiscal 2022 is expected to be approximately 8% to 10%
- SG&A expenses are expected to be approximately 16% to 17% of sales
- High volume of defense work has exceeded the labor capacity of Batavia facility
- Financial covenants under term loan and revolving credit facility were breached