Graham Corporation's Q3 2025 Earnings: A Recipe for Success

In the third quarter of fiscal 2025, Graham Corporation (NYSE: GHM) delivered a strong performance, reflecting the company's strategic focus on key end-markets and operational improvements. Revenue increased by 7.3% to $47.0 million, driven by continued strength in the defense, space, and aftermarket sectors. Gross profit margin improved by 260 basis points to 24.8% of sales, while net margin increased by 300 basis points to 3.4% of sales. Adjusted EBITDA margin expanded by 180 basis points to 8.6% of sales, demonstrating the company's ability to optimize its operations and enhance profitability.



Graham Corporation's strategic focus on key end-markets has been instrumental in driving revenue growth and margin expansion. The company's sales to the defense market grew by $2.7 million, or 11.1%, compared to 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 remained strong, with a 2.4% increase compared to the prior year.

The company's operational improvements and cost-saving measures have also contributed to its strong financial performance. Gross profit for the quarter increased by $2.0 million to $11.7 million compared to the prior-year period, driven by leverage on higher volume, better execution, and improved pricing. The third quarter of fiscal 2025 gross profit benefited by $0.3 million from a $2.1 million grant received from the BlueForge Alliance earlier in the fiscal year, which reimbursed Graham for the cost of its defense welder training programs in Batavia and related equipment. As of the reporting period, the company had received $1.5 million of funding under this grant.

Graham Corporation's investments in its people and strategic acquisitions, such as the BlueForge Alliance grant, have further contributed to its financial performance and growth prospects. The company has continued to invest in its people, as reflected in the increase in selling, general, and administrative expenses (SG&A) by $0.9 million compared to the prior year. This increase reflects the Company’s continued investments in its people, which has led to better execution and improved product mix. The BlueForge Alliance grant is an example of a strategic partnership that has contributed to Graham Corporation's financial performance and growth prospects, directly contributing to the company's gross profit and strengthening its position in the defense market.

In conclusion, Graham Corporation's Q3 2025 earnings call highlights the company's strategic focus on key end-markets, operational improvements, and investments in its people and strategic acquisitions. These factors have contributed to the company's strong financial performance, including a 7.3% increase in revenue, a 260 basis points improvement in gross profit margin, and a 38% increase in adjusted net income per diluted share. The company's confidence in achieving its long-term growth targets is further bolstered by these strategic initiatives. As an investor, it is essential to stay informed about the company's progress and consider its potential for future growth and success.