Industrial fluid and energy systems manufacturer Graham Corporation (NYSE: GHM) announced better-than-expected revenue in Q4 CY2025, with sales up 20.5% year on year to $56.7 million. The company expects the full year’s revenue to be around $236 million, close to analysts’ estimates. Its non-GAAP profit of $0.31 per share was 69.1% above analysts’ consensus estimates.
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Graham Corporation (GHM) Q4 CY2025 Highlights:
- Revenue: $56.7 million vs analyst estimates of $52.35 million (20.5% year-on-year growth, 8.3% beat)
- Adjusted EPS: $0.31 vs analyst estimates of $0.18 (69.1% beat)
- Adjusted EBITDA: $6.04 million vs analyst estimates of $4.81 million (10.7% margin, 25.7% beat)
- The company lifted its revenue guidance for the full year to $236 million at the midpoint from $230 million, a 2.6% increase
- EBITDA guidance for the full year is $26 million at the midpoint, above analyst estimates of $25.38 million
- Operating Margin: 5.5%, down from 6.5% in the same quarter last year
- Backlog: $515.6 million at quarter end, up 33.9% year on year
- Market Capitalization: $921.7 million
StockStory’s Take
Graham Corporation’s fourth quarter was marked by robust demand across its primary end markets and clear execution of its multi-platform strategy, resulting in a notable positive reaction from the market. Management credited solid performance in the defense segment—driven by the timing of project milestones and growth across existing and new programs—as well as contributions from newly acquired businesses. CEO Matthew Malone highlighted, “Results were supported by the timing of key project milestones, particularly within our defense business, along with contributions from our new programs and continued growth across existing platforms.”
Looking forward, Graham’s updated outlook is shaped by ongoing investments in capacity, integration of recently acquired technologies, and a record backlog that provides revenue visibility into next year. Management emphasized that organic and inorganic initiatives are expected to drive both growth and margin expansion, with new platforms such as FlackTek and Xdot set to enhance capabilities in advanced mixing and high-speed turbomachinery. CEO Matthew Malone underscored, “We are delivering strong operating results today, while at the same time, making deliberate organic and inorganic investments that expand our capabilities, deepen customer relationships, and position Graham for long-term growth.”
Key Insights from Management’s Remarks
Management attributed the quarter’s results to expanded production capabilities in defense, strategic acquisitions, and operational enhancements across manufacturing sites.
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Defense backlog momentum: Demand for U.S. Navy and undersea programs remained strong, with new manufacturing capacity in Batavia, NY, and additional opportunities arising from core competencies in precision fabrication and welding. Management noted increased scope on existing projects and success in meeting stringent customer requirements.
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FlackTek acquisition impact: The acquisition of FlackTek added a third core technology platform in advanced mixing, expanding Graham’s portfolio into new industrial and process markets. FlackTek’s MEGA product line, a production-scale bladeless mixer, was described by management as a category-defining platform with broad applicability and potential to accelerate growth in both existing and adjacent markets.
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Xdot technology integration: The purchase of Xdot Bearing Technologies brought proprietary foil bearing expertise, enabling new high-speed rotating machinery solutions. This integration, combined with Barber-Nichols’ capabilities, is expected to strengthen Graham’s offerings in aerospace, defense, and energy transition applications.
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Operational investments: Completion of new manufacturing, assembly, and testing facilities, particularly in Colorado and Florida, increased throughput and quality control. Automation, AI-driven service initiatives, and a global engineering expansion in India are expected to support future scalability and cost efficiency.
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Aftermarket and service expansion: Growth in aftermarket sales across both defense and energy/process segments highlighted the durability of Graham’s installed base. Management pointed to an aftermarket acceleration initiative using AI tools to boost responsiveness and service penetration, laying groundwork for recurring revenue streams.
Drivers of Future Performance
Graham’s outlook for the coming year is driven by integration of new platforms, operational scaling, and continued strength in defense and energy markets, with a focus on margin improvement and backlog conversion.
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Backlog conversion and defense stability: Management expects a sizable portion of the record backlog to convert to revenue over the next 12–24 months, with the defense market accounting for about 85% of backlog, providing predictability and stability. CEO Matthew Malone stated that current investments position the company to capture further demand from major defense programs and adjacent opportunities.
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FlackTek and Xdot synergy: The integration of FlackTek and Xdot is anticipated to drive organic growth and expand addressable markets. FlackTek’s recurring consumable-driven revenue model and Xdot’s engineering depth are expected to support margin expansion and customer retention.
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Macro and operational risks: Management noted some slowing in large capital expenditures in the energy sector, influenced by oil prices, tariffs, and broader macroeconomic uncertainty. They highlighted that ongoing productivity initiatives and sourcing discipline are intended to offset these risks while supporting long-term EBITDA margin targets.
Catalysts in Upcoming Quarters
In the coming quarters, our team will be monitoring (1) the pace and success of backlog conversion, especially in defense, (2) integration milestones for FlackTek and Xdot, including the ramp-up of new product lines and synergy realization, and (3) the impact of operational investments, such as expanded manufacturing and testing capacity, on throughput and margins. Additionally, we will watch for signs of stabilization in energy and process markets amid macro pressures.
Graham Corporation currently trades at $83.18, up from $73.75 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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