Graham Corp. posts stellar FY08 Q2
Shares of Graham Corp. (AMEX: GHM) a new 52-week high today after the manufacturer and seller of vacuum and heat transfer equipment posted a blockbuster second quarter for fiscal 2008.
Shares of Graham rose 15.13%, or $6.90, to $52.50 at 12:32 p.m. ET. Shares of Graham have been trading in the range of $12.67 to $50 for the past 52 weeks.
For the three months ended Sept. 30, the Batavia, NY.-based company recorded net income of $4.4 million, or $1.10 per diluted share, substantially above the sole analyst’s estimate of $0.42 per share, as surveyed by Thomson Financial. For the second quarter last year the small cap booked net income of $0.563 million, or $0.14 per diluted share.
Revenue climbed 45% to $23.1 million, from $15.9 million in the second quarter of fiscal 2007. An analyst polled by Thomson Financial had forecasted sales of $19.9 million.
The small cap said it enjoyed continued strong demand for ejector systems in the global refinery market, particularly for North American refinery capacity expansions and revamps to handle changing crude feedstock supplies.
Domestic sales accounted for 67% of the total sales in the second quarter, compared with 41% in the prior year’s second quarter, while export sales contributed 33% of second quarter total sales.
Going forward, Graham is guiding for revenues in the range of $80 million to $85 million for the full fiscal year 2008. For the remainder of fiscal 2008, the small cap said it expects gross margins, on average, to be closer to 35%.
The company noted its third quarter (ending Dec. 31, 2007) is typically affected by seasonality, with the lowest number of available production hours. As a result, Graham said it expects to see a decline in efficiencies and production in the third quarter.
Graham further said it continues to see capital project lead times extended further out as global demand for resources, equipment and qualified personnel exceed existing supplies. The company said that there have been some customer delays in accepting equipment ready for shipment because overall project construction is behind schedule.
Despite recent timing issues and subsequent delays, the company said it believes underlying factors driving the current expansion cycle remain intact and will extend the cycle even longer, perhaps beyond 2010.
Graham also updated its backlog status. The company said it expects approximately $50 million of orders in backlog to convert to sales within the next 12 months. Backlog orders consist of approximately 50% for refinery project work, 26% for chemical and petrochemical projects and 24% for other industrial and commercial applications. On Sept. 30, 2007, the company (GHM) had a backlog of $56.8 million, compared with a backlog of $45 million at Sept. 30, 2006.
