Graham Corporation’s third quarter was marked by broad-based revenue growth, with leadership attributing the gains to robust activity in defense programs, momentum in commercial space applications, and a steady performance across energy and process markets. CEO Matthew Malone cited the timing of key project milestones and material receipts, especially in the defense segment, as primary drivers. Malone emphasized that investments in advanced manufacturing and inspection capabilities, along with the recent opening of a new facility in Batavia, New York, contributed to operational execution and positioned the company to fulfill strong demand from long-standing U.S. Navy contracts.
Is now the time to buy GHM? Find out in our full research report (it’s free for active Edge members).
Graham Corporation (GHM) Q3 CY2025 Highlights:
- Revenue: $66.03 million vs analyst estimates of $57.55 million (23.3% year-on-year growth, 14.7% beat)
- EPS (GAAP): $0.28 vs analyst estimates of $0.28 (in line)
- Adjusted EBITDA: $6.30 million vs analyst estimates of $6.04 million (9.5% margin, 4.3% beat)
- The company reconfirmed its revenue guidance for the full year of $230 million at the midpoint
- EBITDA guidance for the full year is $25 million at the midpoint, above analyst estimates of $24.58 million
- Operating Margin: 6.2%, in line with the same quarter last year
- Backlog: $500.1 million at quarter end
- Market Capitalization: $638.9 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Graham Corporation’s Q3 Earnings Call
- Robert Brooks (Northland Capital Markets) asked for clarification on the timing of space and aerospace order recognition. CFO Christopher Thome explained that $15 million was booked in the quarter, with $7 million to follow in the next quarter.
- Robert Brooks (Northland Capital Markets) questioned why full-year guidance was maintained despite strong results. Thome replied that the timing of some orders simply shifted forward, and the company remains on track with internal expectations.
- Russell Stanley (Beacon Securities) sought more detail on the composition of defense orders and potential impacts of a government shutdown. CEO Matthew Malone clarified that most bookings were diversified, not solely tied to shipbuilding, and said any shutdown impact was minimal due to the long-term nature of programs.
- Russell Stanley (Beacon Securities) asked about customer response to the Xdot acquisition and its strategic value. Malone described the deal as an opportunity to broaden technical capabilities and enter new markets, noting initial customer interest in new bearing solutions.
- Joseph Gomes (NOBLE Capital) requested specifics on investments supporting recent space market orders. Thome confirmed that new capital expenditures are directly tied to secured orders and are expected to deliver high returns.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will closely track (1) the pace and mix of backlog conversion, especially in defense and space, (2) execution and ramp-up at the new Batavia and Florida facilities to assess throughput gains, and (3) the integration of Xdot Bearing Technologies and its impact on product innovation. Additionally, we will monitor the order pipeline for small modular nuclear reactor and commercial space applications as potential drivers of incremental growth.
Graham Corporation currently trades at $58.14, down from $62.30 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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