Graham Corp's Q3 2025: Revenue Surge, Margin Expansion, and Strategic Growth

Graham Corporation (NYSE: GHM), a global leader in mission-critical fluid, power, heat transfer, and vacuum technologies, reported robust financial results for its third quarter of fiscal 2025. The company's strong performance reflects continually improving execution across its business, driven by a robust demand for its diversified product portfolio. Here's a closer look at the key highlights and the factors contributing to Graham Corp's success:



Revenue Growth and Margin Expansion

Graham Corp's revenue increased by 7.3% to $47.0 million, driven by continued strength in key end-markets. Gross profit margin improved by 260 basis points to 24.8% of sales, net margin increased by 300 basis points to 3.4% of sales, and adjusted EBITDA margin expanded by 180 basis points to 8.6% of sales. Net income per diluted share surged 600% to $0.14 in the third quarter, while adjusted net income per diluted share increased by 38% to $0.18.

Strategic Focus on Key End-Markets

Graham Corp's strategic focus on key end-markets, such as defense, space, energy, and process industries, has significantly contributed to its strong revenue growth. Sales to the defense market grew by 11.1% from the prior year period, driven by the addition of new defense programs, the ramp-up of existing programs, better execution, and the timing of key project milestones. Additionally, higher chemical/petrochemical sales contributed $2.7 million to growth, driven by increased sales of capital equipment. Aftermarket sales to the refining, chemical/petrochemical, and defense markets of $9.7 million remained strong and were 2.4% higher than the prior year.



Investment in People, Processes, and Technology

Graham Corp's investment in its people, processes, and technology has been instrumental in driving operational efficiency and margin expansion. The company has continued to invest in its people, leading to better execution and improved pricing. It has also made proactive investments in capabilities and workforce development, such as the BlueForge Alliance grant for defense welder training, which has benefited the company's gross profit. Additionally, the company has invested in capacity expansion and increasing capabilities, allowing it to leverage higher volume and improve margins.

Strong Balance Sheet and Growth Initiatives

Graham Corp's strong balance sheet, with no debt, $30.0 million in cash, and access to $43 million under its revolving credit facility, provides ample firepower for both organic growth and potential strategic acquisitions. The company's increased capital expenditure guidance to $15-19 million indicates confidence in growth opportunities, particularly in defense capabilities. The strong backlog of $385 million and a YTD Book-to-Bill ratio of 1.0x provide multi-year revenue visibility and support long-term growth.

In conclusion, Graham Corp's Q3 2025 earnings call highlights strong revenue growth, margin expansion, and strategic growth initiatives. The company's strategic focus on key end-markets, investment in people, processes, and technology, and strong balance sheet position it well for continued success in the long term. As the company continues to execute on its growth strategies, investors can expect robust performance and value creation.