Batavia’s Graham Corp. on Tuesday reported lackluster first-quarter results, missing analysts’ expectations. Separately, the manufacturer named a new chief executive to replace long-time CEO James Lines, who plans to retire.
For the first quarter ended June 30, Graham posted a 21 percent increase in sales to $20.2 million. The company reported a net loss for the quarter of $3.1 million. On a per-share basis, the quarterly loss was 31 cents.
GAAP earnings missed Wall Street estimates by 26 cents, while revenue missed by $3.63 million. Results include one month of financials from the company’s acquisition of Barber-Nichols, which was completed on June 1.
“While sales improved as a result of the acquisition, we had a number of projects with lower margins which heavily impacted profitability in the quarter. This partially reflects our initial strategy to aggressively enter the Naval Nuclear Propulsion Program (“NNNP”),” Lines said in a statement. “Given our strong performance on the NNNP projects, we were successful with our strategy and have since earned a sole source position. We expect that the vast majority of the impact of first-order projects will be behind us by the end of fiscal 2022.”
Sales to the defense markets were up 104 percent to $7.1 million and represented 35 percent of total revenue. Sales to the refining markets increased $1.9 million from the prior-year period to $4.6 million and represented 23 percent of total sales. Chemical/petrochemical market sales were $4.6 million, compared with $8 million in the prior fiscal year.
“While the quarter’s results were disappointing, we view this fiscal year as a transition and believe we are better positioned to drive growth and stronger margins for the future,” Lines said.
Lines also early Tuesday said he would retire, following nearly four decades with the company. Daniel Thoren, who currently serves and president and chief operating officer, has been named as president and CEO, effective Sept. 1. He will join the board of directors at that time.
“We first met Dan in 2019 when we were evaluating the acquisition of Barber-Nichols (“BN”), which we completed on June 1, 2021. Dan has proven his strong leadership skills through the rapid growth of BN and, since joining Graham, has demonstrated a robust vision for the future of the company,” said Graham’s board Chairman James Malvaso in a statement. “Dan had built a strong leadership bench at BNI enabling this succession plan to be another key benefit of our transformative acquisition. We are excited to have him take charge of the next phase of Graham’s future.”
Thoren was named president and COO in June. He previously served as BN’s president and CEO since 1997, quadrupling the size of the business during that time.
“I believe these are incredible times for Graham as we work to transform the business and pivot toward growth,” Thoren said. “I am excited to lead the team as we expand our defense business, develop new products and capture a larger share of the defense and energy markets we serve. I am looking forward to working with our combined team and the Board to drive value for customers and shareholders.”
Lines has been with Graham for more than 37 years and led the organization for more than 15 years. Malvaso said that under Lines’ leadership, Graham has improved its cash generation, expanded geographically and created more flexible and efficient production processes while building a culture of quality.
“It has been an honor and privilege to serve as the president and chief executive officer of Graham. I value the relationships developed through the years with our employees, customers and shareholders and I appreciate the support the board of directors has provided all these years,” Lines said. “I am excited about Graham’s future under Dan’s leadership and look forward to watching the company transform into a leading defense industry supplier while further advancing our energy business. We have enhanced our strong leadership team with the BNI acquisition and I expect that supported by our tremendously talented team of employees, they will propel Graham to new heights.”
Graham is a global business headquartered in Genesee County that designs, manufactures and sells critical equipment for the energy, defense, aerospace and medical industries, among others.
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