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.”
Is now the time to buy GHM? Find out in our full research report (it’s free for active Edge members).
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: 7%, in line with the same quarter last year
- Backlog: $515.6 million at quarter end, up 33.9% year on year
- Market Capitalization: $928.8 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 Q4 Earnings Call
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Russell Stanley (Beacon Securities): Asked about Graham’s approach to allocating capital expenditures in light of increased defense demand. CEO Matthew Malone confirmed ongoing investments in efficiency and capacity, stating Graham will maintain historical capital spending ratios to meet future demand.
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Russell Stanley (Beacon Securities): Inquired about future M&A strategy after the FlackTek acquisition. Malone indicated a focus on growing the three core platforms, with potential for new platforms in the longer term through organic growth or further acquisitions.
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Robert Brooks (Northland Capital Markets): Asked for specifics on growth in existing defense programs and whether Graham is winning more wallet share. Malone explained that additional scope and new solicitations are being secured due to strong performance and customer satisfaction.
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Gary Schwab (Valley Forge Capital Management): Questioned restrictions on FlackTek’s MEGA product sales. Malone clarified there are limited restrictions tied to specific customer purchases, but broader opportunities remain open across markets.
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Robert Brooks (Northland Capital Markets): Requested details on the impact and outlook for material receipts on gross margin. CFO Christopher Thome explained these are lumpy but expected to normalize, with visibility extending about a year ahead.
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 $84.13, up from $73.75 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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