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Edited Transcript of GHM earnings conference call or presentation 30-Jan-19 4:00pm GMT

Q3 2019 Graham Corp Earnings Call

BATAVIA Feb 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Graham Corp earnings conference call or presentation Wednesday, January 30, 2019 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* James R. Lines

Graham Corporation - President, CEO & Executive Director

* Jeffrey F. Glajch

Graham Corporation - VP of Finance & Administration, CFO & Corporate Secretary

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Conference Call Participants

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* Joseph Logan Mondillo

Sidoti & Company, LLC - Research Analyst

* William Lewis Baldwin

Baldwin Anthony Securities, Inc. - Principal and Co-founder

* Karen L. Howard

Kei Advisors LLC - EVP

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Presentation

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Operator [1]

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Greetings, and welcome to Graham Corporation Third Quarter Fiscal Year 2019 Financial Results. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Karen Howard, Investor Relations for Graham Corporation.

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Karen L. Howard, Kei Advisors LLC - EVP [2]

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Thank you, Dana, and good morning, everyone. We appreciate you joining us today to discuss Graham's fiscal 2019 third quarter and year-to-date results. You should have a copy of the news release that was distributed across the wires this morning. We also have slides associated with the commentary that we're providing here today. If you don't have the release or the slides, you can find them on the company's website at www.graham-mfg.com. On the call with me today are Jim Lines, our President and Chief Executive Officer; and Jeff Glajch, our Chief Financial Officer. Jim and Jeff will review the results for the period as well as our outlook. We will then open the lines for Q&A.

As you are aware, we may make some forward-looking statements during this discussion as well as during the Q&A. These statements apply to future events and are subject to risks and uncertainties as well as other factors, which could cause actual results to differ materially from what is stated on the call. These risks and uncertainties and other factors are provided in the earnings release and in the slide deck as well as with other documents filed by the company with the Securities and Exchange Commission. These documents can be found on our website or at www.sec.gov.

I also want to point out that during today's call, we will discuss some non-GAAP financial measures, which, we believe, are useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of comparable GAAP to non-GAAP measures in the tables accompanying today's earnings release.

And with that, it is my pleasure to turn the call over to Jeff to begin. Jeff?

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Jeffrey F. Glajch, Graham Corporation - VP of Finance & Administration, CFO & Corporate Secretary [3]

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Thank you, Karen, and good morning, everyone. Turn your attention to Slide 4. Sales in the third quarter were $17.2 million, which was comparable to the same period last year. We did have a $1.1 million unfavorable impact in the quarter due to the new revenue recognition standard. However, the impact was larger compared to what we expected entering the quarter. I noted on a prior call that we had a significant project in China, which we expected to ship in Q3. Unfortunately, it shipped on January 4, 5 days after the quarter ended. Had that shipped by the end of the quarter, our revenue would have been around $20 million.

Q3 net income was $95,000 or $0.01 per share. In Q3 of last year, we had a loss due to an intangible asset impairment charge as well as impacts related to the 2017 Tax Act. Without those adjustments, Q3 of last year would have been breakeven. Orders in the third quarter were $23.2 million, with petrochem and refining orders in North America and Asia being the key contributors.

Our backlog at the end of the third quarter improved to a record $133.7 million, though part of the $6 million gain in backlog in the quarter was obviously due to the lower revenue level. Our backlog is evenly split between Navy and commercial projects. Importantly, the commercial backlog is nearly triple the $22.8 million low point, which we saw in September of 2017. We're quite pleased with this increase in the commercial backlog.

On to Slide 5. As I noted, Q3 sales were similar to last year's Q3. Sales in the quarter were 83% domestic, 17% international. In last year's third quarter, sales split was 65% domestic, 35% international. Gross profit increased to $3.7 million from $3.5 million last year, primarily due to improved pricing and higher-margin projects, partially offset by under-absorbed additional production cost, which have been increased to support higher capacity over the next number of quarters. Gross margin was 22%, up from 20% last year. EBITDA margin was 1.1%, down from 2.1% in last year's third quarter, and net income was $0.01 per share compared to an adjusted breakeven level last year.

On to Slide 6. Sales in the first 9 months of fiscal 2019 were $68.2 million compared with $55.4 million in the first 9 months of last year. Year-to-date sales were 63% domestic, 37% international compared with 67% and 33%, respectively, last year. Year-to-date gross profit was $17.1 million, up from $12 million last year, and gross margins are up to 25% from 22% last year. The increase in gross profit is due to greater volume and the increase in gross margin, with the improved pricing, again, partially offset by the added cost to increase our usable capacity. Year-to-date EBITDA margins were 8.3%, up from an adjusted level of 5% in the 9 months -- first 9 months of last year. Net income was $4.2 million or $0.43 per share, up from an adjusted level of $1.2 million or $0.12 per share last year.

On to Slide 7. We continue to have positive operating cash flow in the first 9 months of the year at $8.5 million. Our cash balance is at $80.4 million or $8.18 per share. This is up from $76.5 million at the end of fiscal 2018. We continue to be pleased with our expanding acquisition pipeline despite higher prices in that arena, and we continue to hope to be able to utilize some of our cash to grow inorganically.

Capital spending increased significantly in the third quarter compared with the first half of the year and is now at $1.5 million year-to-date. We expect to spend between $2 million and $2.5 million in capital for the full fiscal year.

Jim will complete our presentation by providing more depth on Q3, our current market outlook and our full year guidance.

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James R. Lines, Graham Corporation - President, CEO & Executive Director [4]

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Thank you, Jeff. Good morning, everyone, and we thank you for joining our third quarter conference call. I will begin on Slide 9.

Revenue in the quarter was down slightly compared to the third quarter of last year. Revenue at $17.2 million in the quarter was below initial expectations, as Jeff had said and also down sequentially from the second quarter due to 2 factors.

First, shipment of a large international order was pushed into January. This particular order due to new revenue recognition standards followed completed contract rather than percentage of completion revenue recognition accounting treatment. That was unusual. However, there will be similar completed contract revenue standard orders in the future, which might cause volatile revenue trends quarter-to-quarter when such orders are executed. This particular order, as Jeff said, has now shipped.

Secondly, certain naval market backlog conversions slowing due to the pace at which, we believe, we can advance production. This is impacting revenue projections for the second half of fiscal 2019 and also fiscal 2020.

And looking at revenue by end market, revenue to the crude oil refining market was $6.6 million, up $1.2 million year-over-year. Chemical and petrochemical market revenue was down $1.3 million at $2.9 million in the quarter. Power industry revenue was up $1 million, while revenue to other end markets including the naval market was down $1 million.

We continue to have a concentration of domestic revenue, with domestic end markets accounting for 83% of total revenue. However, our current backlog will result in an improvement to revenue in future quarters that is for international end markets. With our recently updated revenue guidance, fiscal 2019 is projected to provide 16% to 22% top line growth compared to fiscal 2018.

Moving on to Slide 10. I am pleased with the level of orders, which on a trailing 12-month basis, is up appreciably from the low-water mark during the second quarter of fiscal 2017. Importantly, orders from our crude oil refining and chemical/petrochemical markets are up measurably on a trailing 12-month basis compared to trailing 12-month totals for the period ending the third quarter of fiscal 2018.

Our sales and engineering personnel continue to focus resources on key bids and position Graham to be successful as is evident by the slope and the value of the trailing 12-month order trend.

There has been and there will continue to be large variation for end market order levels quarter-to-quarter. However, the best measure is the trailing 12-month trend and how much is for our traditional oil refining and chemical/petrochemical markets versus orders for the naval market. 55% to 60% of the $123 million of orders during the past 12 months were for refining and chemical end markets.

Slide 11 provides backlog detail. Backlog on December 31 was $133.7 million and is up sequentially from $128 million at the end of the second quarter.

In comparing backlogs year-over-year, last year at this time, backlog was $96.2 million. Backlog for refining and chemical/petrochemical end markets was approximately $37 million a year earlier. And as of December 31, it is approximately $57 million or up roughly $20 million compared to last year.

Backlog for naval end markets is up nearly $16 million from a year earlier, while backlog to power end markets is up $1.4 million. There is healthy improvement in our overall backlog that is well diversified across key end markets. This provides a great base for fiscal 2020. Backlog conversion is projected to have 50% to 55% of backlog convert over the next 12 months and 30% to 40% convert to 2 years or longer from now.

Moving on to guidance. Consistent with our guidance -- excuse me, consistent with the revenue guidance update a couple weeks back, we expect fiscal 2019 revenue to be between $90 million and $95 million, up 16% to 22% from fiscal 2018. Gross margin will be between 25% and 27%.

SG&A expense will be between $18.25 million and $18.75 million. We expect our effective tax rate to be roughly 20%. Our -- for fiscal 2020, we're expecting our top line growth -- we are expecting top line growth, and we'll provide revenue range during our next conference call.

Dana, I would ask that you please open the line for questions now. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Joe Mondillo from Sidoti & Company.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [2]

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So on -- just to clarifying the delays in delivery in this quarter. On the naval side, you said that was due to pace of production. Is that production on your end or on the customer end?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [3]

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It's tied to how the design releases and the approvals for fabrication flow from the shipyard back to us. It's being paced more by the customer than by our execution capability.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [4]

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Okay. And so considering just the, sort of, Navy backlog then considering that, is this going to just sort of just push everything out a little bit going forward?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [5]

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Indeed. It's affecting the second half of 2019, and we've made that adjustment with our revision to guidance. It's also slowing revenue conversion based upon how we first modeled internally fiscal 2020 financial projections. We tend to deploy that available labor into other contracts, not necessarily naval contracts. But it is affecting over the next 12 to 18 months our revenue conversion of our naval backlog, and we've made those adjustments for fiscal '19 guidance, and when we update our fiscal -- when we provide our fiscal '20 revenue range, it will reflect the slowing conversion pace for that particular segment of our naval backlog.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [6]

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Okay. Is there any way you could, sort of, help us rethink of how sort of the -- your Navy backlog flows in terms of the cadence throughout the next 18 months? I know a couple quarters ago, you were sort of talking about, sort of, mid-teens, low to mid-teens area of work in fiscal '19 and going beyond $20 million in 2020. Is that, sort of, just pulled back by a few million dollars each year or?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [7]

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Joe, that's a fair question. As we think now about 2020, which is the more relevant question, where we had been expecting to push beyond $20 million for 2020's revenue from naval backlog, we now feel it will be comparable to the revenue level of our recent past, in the mid-teens.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [8]

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Okay. The backlog at the Navy business actually picked up a little bit. Are you continuing to find more work beyond the core work? And beyond the -- sort of the delays in the work that you're doing right now because I know that has been, sort of, a goal to try to maximize your work and find more work that you can do for the customer?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [9]

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Sure. We have continued to win new naval work. It has been additional orders for components that we previously had in backlog. So similar components. The diversification efforts to expand our participation, those are still underway. We would not necessarily comment that the additional backlog growth is tied to components because it's repeat work of [owners] that we had previously done or are working on. I'm not categorizing that as overutilization of our diversification effort. That still is underway, not being realized yet in backlog growth or diversification of our backlog for the naval strategy.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [10]

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Okay, and then just sort of shifting to your legacy business in oil refining and chem -- petrochem. First off, sort of what are you seeing in your short cycle part of your business that tends to be sort of a leading indicator of what's going on, just given the volatility in oil prices and just in general sort of economic metrics recently?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [11]

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Sure, sure. That's a really good question. That's not always perceptible in our commentary or in our looking -- the way in which we provide backlog or order patterns. But for our short cycle work, we are seeing that if I compare year-to-date today to year-to-date at this point last year, the short cycle new orders are up between 10% and 15%.

Now that's nice but that's off of a bottom, so just by a comparison, they're down about 13% compared to 14% or 15%. So we are bouncing off a trough. We're not quite back to where they were in the '14 and '15 timeframe but directionally, they're moving more positively. That's our short cycle work as a whole.

The subsegment of our short cycle work is more exciting, which is our aftermarket or spare parts. And that is actually up about 20% year-on-year, year-to-date compared to where we were last year, and it's flattish compared to '15 and -- '14 and '15 levels. So that's all very encouraging.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [12]

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And would you say over the last, sort of, 6 months or 9 months on a sequential basis, is that, sort of -- up until currently, is that an acceleration from sort of 6, 9 months ago? Or was it maybe stronger 6 months ago and you've started to see any slowdown? Just wondering within the last, say, 3 months or so, are you seeing any sense of a slowdown given what we're seeing in the global economy?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [13]

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I hate to make comments on a quarter-to-quarter sequential basis because it can be misleading. That's why I chose to make the remark based on year-to-date, so 3 quarters in aggregate compared to 3 quarters in aggregate a year ago. But on a quarter-to-quarter basis, which, sort of, I'm suggesting is not a great way to look at it, it's up 20% year-on-year, and on a sequential basis, it's sort of flattish to up 10%.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [14]

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Okay. And could you sort of talk about the refining business, the chemical business, I know both of them have sort of different fundamentals at times, and sort of what you're seeing within those markets in general. And then on a geographic perspective, could you, sort of, address what you're hearing regarding that. I know China is a big market where you own, sort of, maybe 50% or so market share. What you're seeing in that market as well as maybe some of your other international markets?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [15]

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Sure, Joe. Starting with refining, in the international markets, this is for bidding activity, we have very nice basket of opportunities in Asia, and these projects are fairly large in the $5 million to $10 million value range, and there's a few of those. So we see a nice basket of opportunities that are coming up in India, in Southeast Asia and also in China.

China seems to be moving back toward a handful -- couple of refining projects a year starting to go ahead. We have those ID-ed. We're working on those early. We're involved in the early work on the India projects, and we've been chasing some of the Southeast Asia projects. And FEED and EPC bid for a couple of years and they're coming up to fruition now it seems like.

So we're feeling more enthusiastic about the outlook in the international markets for refining, and this is principally new capacity commentary in the international markets, so there's very sizable amount of work that we've identified, we're participating in and feel generally pretty good about. And the sales organization and engineering teams are doing the right things to get us in a position to have the right participation level, and we believe the right success level for those projects.

In southeast -- I'm sorry, Latin America, and that's a slow period for us. There's not much going on there except for a couple of projects that will likely go ahead, but it's nothing like the identification of the project scope that we saw 4, 5 years ago coming in Latin America, but there will be pockets of revamp and replacement to keep certain refineries up and running that have capital to do so.

In the Middle East, we're not seeing anything readily right in front of us. That's more for purchase over the next 2 or 3 quarters, but there are some projects that are percolating for new capacity and throughout the Middle East that we feel we'll participate on. Again, that's new capacity.

And then in North America, I would say it's steady around revamp, debottleneck and the aftermarket elements of North America's refining base. So I generally feel -- we generally feel good about the north -- the oil refining outlook, both domestically and internationally, taking a longer-term view or a midterm view over the next couple of years.

Petchem, the next wave is in North America is sputtering along. By no measure is it as stout as the first wave. And it's going to be more measured and come in not with the strong wave that we saw, the first wave. We won some of the work. We're bidding some of the other work that's coming up. I think that's going to be more of a periodic type of order environment than a steady flow. And in the international markets, I'd say that's comparatively steady versus the last couple of years for petchem and chem. I hope that covers the question? Yes.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [16]

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Yes. No, I think that was great. So just to, sort of, clarify, it doesn't sound like a whole lot has -- given what we've seen in, sort of, commodity prices and global economic activity, it doesn't seem like your, sort of, picture of things has changed a whole lot, call it, 3 to 5 -- compared to 3 to 5 months ago, is that sort of fair?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [17]

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I think that's -- we've kept a balanced look. We've not been overly enthusiastic, but we definitely feel more positive about the near-term outlook, and by no measure do we think it's anything like 2004, '05, '06 yet, but it's not bad.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [18]

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Okay, and just a sort of follow-up again regarding the sort of same-type question. When you look at your bidding and quoting activity, the pipeline there, has that been sort of consistent over the last couple of quarters? Has anything changed recently? Anything to sort of highlight there of interest?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [19]

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No. Our view would be -- I do have this dialogue rather frequently with the sales and the application engineering group. It feels fairly steady, at an okay level. And again, I go back to -- I'd like to compare and contrast the different periods of time in our history and trying to find that catalyst that's like 2003, '04, '05, but we're not quite at that level of activity -- not quite is the wrong -- we're not at that level of activity, but it is moving up from 2 or 3 years ago and is fairly steady.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [20]

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Okay, and then I just wanted to ask regarding your backlog in terms of gross margins. The gross margin in the backlog, how do they compare relative to sort of the gross margins that you've been seeing over the last few quarters. If you take out the second quarter, second quarter, you said 29%. That was sort of an outlier, but if you take out that, you've been sort of between 22% and 24%. How would you say the backlog compares to sort of where you've been in terms of gross margins?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [21]

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I would say directionally, it's upward compared to what's being relieved. I want to qualify that with -- we had some recent wins where there's a -- pretty sizable wins, where we're going to do a large percentage of the work with international fabricators. So that has an effect of changing the drop down, but as we load up our asset-base with work for Batavia as an example to manufacture, that incremental volume at a different margin profile drops down to operating profit just fine, it averages up. So the booked gross margin might look as though it's averaging down but at the op profit line, it averages up.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [22]

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Okay. And then...

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James R. Lines, Graham Corporation - President, CEO & Executive Director [23]

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That would be then...

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [24]

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No, I understand. There is a sort of a mix issue, especially with Navy starting to ramp up a little bit. I also wanted to ask you on SG&A levels. The last 2 years, your SG&A have outpaced the growth rates at -- on the revenue line. Looking at fiscal '20, I'm not sure if you have a good idea at this time, but I know you did make some investments over the last 2 years specifically in your sales force and elsewhere.

Looking at fiscal '20, do you have any idea, sort of, how you're thinking about SG&A? If you're able to get the revenue growth that you're sort of alluding to in fiscal '20, how do you think SG&A sort of plays out?

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Jeffrey F. Glajch, Graham Corporation - VP of Finance & Administration, CFO & Corporate Secretary [25]

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Joe, this is Jeff. We saw -- we have seen a pretty meaningful step up in SG&A in fiscal '19 as you noted, and that was around a number of things. One is, we have added some significant resources, particularly in our sales organization and our support organizations to support the level of growth that we're seeing now but more importantly, level of growth that we expect to see going forward. And then we've had some low points on commissions and variable comp and things like that over the last couple of years, which has stepped up in fiscal '19.

As we -- while we're not in a position to put out anything specific out for fiscal '20, I would say fiscal '20 relative to fiscal '19 will probably be higher, but it shouldn't be the level of step-up that we saw from '18 to '19 or from '17 and '18 to '19, so hope that's helpful.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [26]

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Okay, yes, definitely. And then just last question for me. I just wanted to know that $206,000 on other income, it's been a run rate for the last few quarters. What is that related to exactly?

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Jeffrey F. Glajch, Graham Corporation - VP of Finance & Administration, CFO & Corporate Secretary [27]

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Sure. There's -- there was change in how the pension accounting was handled, and so if you think about pension income and pension expense. It was all in the past put together as 1 number, and a portion of that number would be in cost of goods sold and a portion of it would be in SG&A.

There's now a piece of the income side that is excluded from that cumulated number -- accumulated number, and that is now put down in other income. So what's happened is in the SG&A and cost of goods sold on a quarterly basis, our expense or lack of income, I guess is a better way to put it, is now higher in cost of goods sold and SG&A, and then there's that other income line down in every quarter.

The $206,000, it's in there, was that number -- will be that number -- should be that exact number or pretty darn close to it for the fourth quarter. Don't know what that number will look like in fiscal '20 because you have to revalue all your pension information at the end of every fiscal year. So I will know in the middle of April whether that's $206,000, if it's a little bit higher or a little bit lower.

I don't think it'll change dramatically, but that number will now stay in other income, and that has increased our cost by that same level on a quarterly basis, up above the line. Again, it's an accounting change that just kicked in this fiscal year.

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Joseph Logan Mondillo, Sidoti & Company, LLC - Research Analyst [28]

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Okay, that's good to know. And just to go back to my prior question regarding SG&A, almost about $800,000 is causing SG&A to ramp up too?

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Jeffrey F. Glajch, Graham Corporation - VP of Finance & Administration, CFO & Corporate Secretary [29]

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Some of that. There's a little of that in cost of goods sold too, but there's lot of that in SG&A.

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Operator [30]

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(Operator Instructions) Our next question comes from the line of Bill Baldwin with Baldwin Anthony Securities.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [31]

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What do you kind of think is weighing on the petrochemical business right now in terms of management's kind of going, I guess, you call it sputtering along, but kind of going slower maybe than perhaps we would have thought a while back. Is it the macro picture? Or is it volatility in feedstock cost prices? Or do you have a sense for what's kind of impacting the CapEx plans?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [32]

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I have a view. If we think about the amount of incremental capacity that was added in the first wave, it was massive, on the order of almost 5% of global ethylene capacity was added in the first wave that's still being digested. The supply and demand effect of how that influences prices of the goods that are being sold. I think it's a cause for pause and a more measured pace for Phase 2 of the expansion cycle.

Phase 2 will be realized, and I think we've always felt and always communicated that Phase 2 would be elongated in comparison to Phase 1. And that was just a massive amount of step change in North American capacity that came in under Phase 1, which is now starting up, and that has an effect on commodity prices. And I think the project sponsors are watching how that's playing out and selecting the point in time to add more capacity.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [33]

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All right. Are you talking primarily right now about cracker-type activity, Jim? Or are you getting more into derivative-type plants?

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James R. Lines, Graham Corporation - President, CEO & Executive Director [34]

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I would say that, that comment pertained to principally the crackers, the ethylene plant. However, the ethylene plant is built for the sole purpose of feeding the downstream derivative plants, so therefore they tend to go together.

We are still seeing some activity of downstream work as it pertains to Phase 1 expansion, but we think that's largely run its course. And again, we're staging for the second wave of expansion, and we won some work. And we're seeing some bidding activity and honestly, Bill, we've been watching this bidding activity for some of these projects for 2 and 3 years already. Sponsors just aren't pulling the trigger.

What happens in the Gulf Coast, and I think you know this better than most, is when there is this concentration of new capacity in a tight labor market, skilled trades become scarcely available, and the costs go up, and that also slows the pace of further incremental capacity because costs start to get out of control, schedule gets elongated and the sponsors just want to wait till things cool off a little bit, and there's a more predictable cost and execution schedule.

But that's normal. For us, it's normal cycle flow. There's a surge, there's a backing off, there's a more measured pace when things ramp up and get more stable. So I think we're in that more stable period, but the skilled trade is affecting cost and is affecting schedule.

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Operator [35]

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Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to turn the call back to management for closing remarks.

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James R. Lines, Graham Corporation - President, CEO & Executive Director [36]

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Well, thank you, Dana, and thank you, everyone, for your time this morning. We're pleased to update you on our third quarter, and we look forward to updating you on our year-end results during our fourth quarter conference call and also providing our initial look for fiscal 2020 at that point in time. Have a great day. Thank you.

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Operator [37]

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This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.