Graham Corporation (GHM) Q4 2026: Record Revenue and Strong Backlog — Positive Outlook

Graham Corporation reported a strong fourth quarter for fiscal 2026, with record quarterly revenue of $67.1 million, representing an increase of $7.6 million or +13% compared to the same period last year. This growth reflects continued strength in the Defense market and contributions from recent acquisitions, particularly FlackTek.

Analyst View

This quarter is a positive outcome for shareholders, showcasing Graham's ability to capitalize on robust demand across its core markets. The increase in revenue, alongside a significant backlog growth of 29% year-over-year to $532.6 million, indicates strong future revenue visibility. The company’s strategic investments and operational execution are paying off, positioning it well for continued growth.

Key Metrics

• Quarterly Revenue: $67.1 million, up $7.6 million or +13% YoY
• Fiscal 2026 Revenue: $245.3 million, up $35.5 million or +17% YoY
• Quarterly Net Income per Diluted Share: $0.18
• Fiscal 2026 Net Income per Diluted Share: $1.12
• Quarterly Adjusted Net Income per Diluted Share: $0.33
• Fiscal 2026 Adjusted Net Income per Diluted Share: $1.40, up 13% YoY
• Quarterly Adjusted EBITDA: $6.8 million
• Fiscal 2026 Adjusted EBITDA: $26.0 million, up 16% YoY
• Record Backlog: $532.6 million, up 29% YoY
• Full Year Orders: $359 million, Book-to-Bill ratio of 1.5x

Operational Highlights

The growth in revenue was primarily driven by:

• Defense Market: Continued strong program execution and demand across key naval defense platforms.
• Space Market: Revenue increased 14% YoY due to ramp-up in existing programs.
• Energy & Process Market: Consistent performance supported by aftermarket demand and contributions from the FlackTek acquisition, which added $2.8 million to sales during the quarter.

Despite the positive revenue growth, gross profit for the quarter was $15.3 million, reflecting a gross margin of 22.7%, down from 27.0% in the prior year. This decline was attributed to a less favorable sales mix, including a higher proportion of lower-margin Defense sales and FlackTek revenue.

Expenses and Cash Flow

• SG&A Expenses: Increased to $43.4 million from $38.9 million YoY, driven by acquisition-related costs and investments in personnel and technology.
• Cash Provided by Operating Activities: $15.9 million for fiscal 2026, impacted by higher working capital balances and transaction bonuses related to the FlackTek acquisition.

Future Guidance

For fiscal 2027, Graham Corporation has provided guidance that reflects continued growth:

• Net Sales: Expected between $285 million and $295 million
• Gross Margin: Projected between 24.5% and 25.5%
• Adjusted EBITDA: Expected between $35 million and $40 million

Conclusion

Investors should watch for the continued integration of FlackTek and the conversion of backlog into revenue in the upcoming quarters. The strong order book and strategic investments signal a promising outlook for Graham Corporation as it navigates fiscal 2027. The company’s focus on operational excellence and capacity expansion is expected to support long-term growth and profitability.

Note: All amounts in the following tables are in thousands, except per share data.

	Three Months Ended March 31, 2026	Three Months Ended March 31, 2025	Year Ended March 31, 2026	Year Ended March 31, 2025
Net sales	$67,000	$59,000	$245,000	$209,000
Cost of products sold	$51,000	$43,000	$188,000	$157,000
Gross profit	$15,000	$16,000	$57,000	$52,000
Gross margin	22.3%	27.0%	23.5%	24.9%
Operating expenses	$12,000	$10,000	$41,000	$36,000
Adjusted net income	$1,000	$4,000	$12,000	$1,000
Net income	$1,000	$4,000	$12,000	$11,000
Net income per share, basic	$0.18	$0.40	$1.12	$1.11
Weighted-average shares used to compute net income per share, basic	11,000	10,000	11,000	10,000

Assets	March 31, 2026	March 31, 2025
Current assets:
Cash and cash equivalents	$6,580	$21,577
Trade accounts receivable, net of allowances	$33,809	$35,507
Unbilled revenue	$59,868	$38,494
Inventories	$50,758	$40,025
Prepaid expenses and other current assets	$4,255	$4,249
Income taxes receivable	$1,184	$1,520
Total current assets	$156,454	$141,372
Property, plant and equipment, net	$60,330	$50,649
Prepaid pension asset	$6,633	$5,950
Operating lease assets	$6,740	$6,386
Goodwill	$38,078	$25,520
Customer relationships, net	$15,372	$13,159
Technology and technical know-how, net	$23,232	$10,310
Tradenames, net	$13,458	$6,858
Deferred income tax asset	$131	$1,502
Other assets	$3,188	$2,404
Total assets	$323,616	$264,110
Liabilities and stockholders’ equity
Current liabilities:
Current portion of finance lease obligations	$23	$21
Accounts payable	$25,740	$27,309
Accrued compensation	$21,547	$19,161
Accrued expenses and other current liabilities	$4,728	$4,322
Customer deposits	$102,421	$84,062
Operating lease liabilities	$1,806	$1,275
Income taxes payable	$5	—
Total current liabilities	$156,270	$136,150
Long-term debt	$13,000	—
Finance lease obligations	$21	$44
Operating lease liabilities	$5,343	$5,514
Deferred income tax liability	$897	$24
Accrued pension and postretirement benefit liabilities	$1,145	$1,192
Other long-term liabilities	$6,625	$1,609
Total liabilities	$183,301	$144,533
Stockholders’ equity:
Preferred stock, $1.00 par value, 500 shares authorized	—	—
Common stock, $0.10 par value, 25,500 shares authorized, 11,247 and 11,077 shares issued and 11,073 and 10,903 shares outstanding at March 31, 2026 and 2025, respectively	$1,124	$1,107
Capital in excess of par value	$41,699	$34,616
Retained earnings	$106,729	$94,229
Accumulated other comprehensive loss	$(5,849)	$(6,987)
Treasury stock (174 shares at March 31, 2026 and 2025, respectively)	$(3,388)	$(3,388)
Total stockholders’ equity	$140,315	$119,577
Total liabilities and stockholders’ equity	$323,616	$264,110

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