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Graham's (GHM) QTD Orders Worth $20M to Boost FY22 Revenues

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Graham Corporation GHM yesterday threw light on its $20-million order wins so far in the second quarter of fiscal 2022 (ending September 2021). The report hints toward strengthening market demand, which, in turn, points toward potential top-line drivers.

The manufacturer and provider of critical equipment serves customers in chemical/petrochemical, energy, defense/space, advanced energy, and heating, ventilation and air conditioning (HVAC) markets.

It is worth mentioning here that Graham’s shares gained 1.24%, ending the trading session at $12.25 yesterday.

Inside the Headlines

In the defense/space market, Graham’s technological expertise is increasingly used in specialty turbomachinery. Of the roughly $10-million orders won, projects worth $2.6 million relate to unmanned undersea vehicles (requiring product development and supply of replacement parts), $5.2 million with connection to submarine ejection systems and $1.2 million relating to cooling pumps in the space market.

The company’s other order wins include $1 million in advanced energy, $6.9 million in chemical/petrochemical and energy, and $1 million in HVAC (for condensers).

Graham anticipates realizing 40% revenues from the orders won (so far in the second quarter) in fiscal 2022 (ending March 2022). The rest 50% and 10% of order revenues will be realized in fiscal 2023 (ending March 2023) and 2024 (ending March 2024), respectively.

For fiscal 2022, Graham anticipates revenues of $130-$140 million, with 45-50% coming from the defense market. The above-mentioned orders are predicted to contribute to the fiscal year’s revenues.

A brief snapshot of orders and backlog in first-quarter fiscal 2022 (ended June 2021) is given below:

Fiscal first-quarter orders totaled $20.9 million, representing year-over-year growth of 82% and a sequential increase of 55%. Of the total, domestic orders accounted for 74%, with major businesses coming from the U.S. Navy.

Backlog, exiting the fiscal first quarter, was $235.9 million, up from $137.6 million at the end of the fourth quarter of fiscal 2021 (ended December 2020). Of the $137.6-million backlog, 80% related to defense, 12% refinery projects, 3% to petrochemical/chemical projects, 2% to space and 3% to other industrial applications.

Zacks Rank, Price Performance and Earnings Estimate Trend

Graham currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from its diversified business structure, buyout activities, solid balance sheet, healthy liquidity and solid order wins. However, softness in the chemical and petrochemical markets is concerning.

In the past three months, the company’s shares have declined 13.4% compared with the industry’s fall of 1.3%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

The Zacks Consensus Estimate of Graham’s earnings is pegged at 20 cents per share for fiscal 2022 (ending March 2022), suggesting a decline of 31% from the previous year’s reported figure.

Graham Corporation Price and Consensus

Graham Corporation Price and Consensus
Graham Corporation Price and Consensus

Graham Corporation price-consensus-chart | Graham Corporation Quote

Stocks to Consider

Three better-ranked stocks in the industry are Manitex International, Inc. MNTX, Applied Industrial Technologies, Inc. AIT and Dover Corporation DOV. While Manitex presently sports a Zacks Rank #1 (Strong Buy), both Applied Industrial and Dover carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 30 days, earnings estimates for these companies have improved for the current year. Further, positive earnings surprise for the last reported quarter was 450.00% for Manitex, 27.97% for Applied Industrial and 11.96% for Dover.

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