Graham Corp. on Thursday reported an improved second quarter, beating Street estimates for earnings, but missing on sales.
Revenues for the quarter ended Sept. 30 jumped 24 percent to $21.4 million from $17.2 million a year ago. Net income was $1.8 million, or 19 cents per diluted share, compared with break-even income and earnings in the same quarter last year.
Analysts had expected earnings of 15 cents on revenue of $23.24 million.
“The gross margin for the current quarter of 29 percent is higher than our expectations for the other quarters during this fiscal year,” Graham President and CEO James Lines said. “We benefited from orders that entered backlog during the previous several quarters, including a few higher-margin projects.”
Lines said the actions Graham took during its downturn to improve lead time, quality and productivity also affected gross margin results. The increase in net income and EPS during the quarter was driven by the increase in sales to the refining market, higher gross profit and a more favorable income tax rate.
During the second quarter, Graham reduced its global headcount “to align with market conditions at the time,” and incurred a $300,000 restructuring charge as a result, officials said. The move will save the company $1.5 million annually.
Graham narrowed its full-year guidance, with anticipated revenue of $98 million to $105 million.
“I believe that fiscal 2019 is set up well to conclude within our guidance and, importantly, fiscal 2020 is staging to be another growth year,” Lines said. “M&A activity has produced some interesting prospects, however seller expectations continue to challenge our valuation hurdle rates.”
Graham is a global business headquartered in Batavia that designs, manufactures and sells critical equipment such as vacuum and heat-transfer equipment for the oil refining, petrochemical, power and defense industries. Shares of company stock (NYSE: GHM) have climbed from $21.42 at the first of the year to $26.27 Thursday.
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