Exhibit 99.1
Graham Corporation 20 Florence Avenue Batavia, NY 14020
Graham Corporation Acquires Nuclear-Accredited Supplier
Energy Steel & Supply Co.
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Expands Graham’s presence and enhances its capabilities in the nuclear power
industry |
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Represents strong strategic fit: |
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Provides market and product diversification |
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Reduces cyclicality |
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Accretive to first full year earnings |
BATAVIA, NY, December 14, 2010 — Graham Corporation (NYSE Amex: GHM), a designer and manufacturer
of critical equipment for the oil refining, petrochemical and power industries, today announced
that it has acquired privately-held Energy Steel & Supply Co. (“Energy Steel”), a leading code
fabrication and specialty machining company dedicated exclusively to the nuclear power industry.
Graham acquired all of the stock of Energy Steel for approximately $18.0 million in cash. An
additional purchase consideration of up to $2.0 million may be paid by Graham if Energy Steel
exceeds profitability targets in calendar years 2011 and 2012. In addition, Graham entered into a
long-term lease of Energy Steel’s Lapeer manufacturing facility with an option to purchase. No
debt was acquired in the transaction. Graham had $70.8 million in cash and equivalents and no debt
at the end of its second quarter of fiscal 2011, which ended September 30, 2010. Graham expects
third quarter transaction costs associated with the acquisition of approximately $0.07 to $0.09,
net of tax, per diluted share. The transaction is expected to be earnings-neutral in the fourth
quarter of fiscal 2011 and accretive to earnings in fiscal 2012.
James R. Lines, Graham’s President and Chief Executive Officer, commented, “Energy Steel is an
ideal complement to the Graham brand. It is a high-quality, custom fabricator offering specialized
solutions to the nuclear industry and has a strong reputation for providing superior customer
service. Acquiring Energy Steel is a logical step in broadening Graham’s offerings to the energy
markets and strengthening our presence in the nuclear sector in particular, which we consider an
important growth market. I believe that the acquisition is an excellent strategic fit for us as it
achieves our goals of growing through market and product diversification while reducing the
cyclicality inherent in the oil and petrochemical industry. Energy Steel has been successful in
its growth by taking market share within existing nuclear power plants. We expect that there is
excellent future potential in leveraging Energy Steel’s nuclear capability with Graham’s
engineering expertise in the expanding utility nuclear power base.”
Lisa Rice, Energy Steel’s President, stated, “We believe this combination will benefit our
customers by joining our well-respected quality processes with Graham’s design engineering and
production resources. I also believe that it opens up growth opportunities for Energy Steel. We
have grown nearly 60% in the last four years and believe that with the larger resource base
Graham provides, we have significantly more potential in the existing power plant market, with the
planned new nuclear power facilities in the U.S., and particularly in the international markets
where Graham has a well-established reputation for quality engineering solutions, product
reliability and responsive customer service.”
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Graham Corporation Acquires Nuclear-Accredited Supplier Energy Steel & Supply Co.
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December 14, 2010 |
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Ms. Rice will remain as Energy Steel’s President, with responsibility for its operations and
growth plans. During her nearly twenty-year career with Energy Steel, including the last seven as
owner, Ms. Rice has directed Energy Steel’s focus on providing on-time delivery, flawless
workmanship, impeccable quality and unparalleled service to the company’s customers in the nuclear
energy industry.
Energy Steel, with expected revenue of approximately $17 million to $19 million in 2010, offers an
array of original equipment and integrated solutions as well as spare parts for nuclear power
installations, both inside the reactor vessel and outside the containment vessel. Energy Steel’s
solutions include pump refurbishment, desuperheaters, heat exchangers, vessels, and various valves,
fittings, filters and piping. Energy Steel also provides services such as code welding, testing,
engineering, and on-site support. Current backlog is approximately
$8 million, of which 90% to 100%
is expected to ship within the next nine months. Guidance provided by Graham on October 29, 2010,
applies only to the Company’s organic business and is not being updated at this time.
Energy Steel was founded in 1982 and is located in Lapeer, Michigan. It has 52 employees, all of
whom are expected to remain with the Company.
Mr. Lines concluded, “Energy Steel has been dedicated to the highly regulated and scrutinized
nuclear power industry for nearly thirty years. We intend to leverage their industry knowledge and
strong customer relationships in order to expand Graham’s presence in the nuclear market and intend
to pursue Graham’s necessary accreditations to complement Energy Steel’s existing stamps.”
Webcast and Conference Call
Graham will host a conference call and live webcast to discuss the acquisition at 9:00 a.m. Eastern
Time on Wednesday, December 15, 2010. The conference call will be accompanied by a slide
presentation which will be available on Graham’s Web site at www.graham-mfg.com. A question and
answer session will follow the formal discussion.
Graham’s conference call can be accessed by dialing 1-201-689-8560 and requesting conference ID
number 362560. The webcast can be monitored on Graham’s Web site at
www.graham-mfg.com.
To listen to the archived call, dial 1-858-384-5517, and enter conference ID number 362560. A
telephonic replay will be available from 12:00 p.m. Eastern Time on the day of the call through
December 22, 2010. A transcript will also be available on Graham’s Web site, once available.
ABOUT GRAHAM CORPORATION
With world-renowned engineering expertise in vacuum and heat transfer technology, Graham
Corporation is a global designer, manufacturer and supplier of custom-engineered ejectors, pumps,
condensers, vacuum systems and
heat exchangers. For over 70 years, Graham has built a reputation for top quality, reliable
products and high-standards of customer service. Sold either as components or complete system
solutions, the principal markets for Graham’s equipment are energy, including oil and gas refining
and electrical power generation, chemical/petrochemical and other process industries. In addition,
Graham’s equipment can be found in diverse applications, such as metal refining, pulp and paper
processing, shipbuilding, water heating, refrigeration, desalination, food processing,
pharmaceutical, heating, ventilating and air conditioning.
Graham Corporation’s reach spans the globe. Its equipment is installed in facilities from North
and South America to Europe, Asia, Africa and the Middle East. Graham routinely posts
news and other important information on its website, www.graham-mfg.com, where additional
comprehensive information on Graham Corporation can be found.
Safe Harbor Regarding Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.
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Graham Corporation Acquires Nuclear-Accredited Supplier Energy Steel & Supply Co.
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December 14, 2010 |
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Forward-looking statements are subject to risks, uncertainties and assumptions and are identified
by words such as “expects,” “estimates,” “projects,” “anticipates,” “believes,” “could,” and other
similar words. All statements addressing operating performance, events, or developments that
Graham Corporation expects or anticipates will occur in the future, including but not limited to,
statements relating to Graham’s acquisition of Energy Steel & Supply Co. (including but not limited
to, the integration of the acquisition of Energy Steel, revenue, backlog and expected performance
of Energy Steel, and expected expansion and growth opportunities within the domestic and
international nuclear power generation market), anticipated revenue, the timing of conversion of
backlog to sales, market presence, profit margins, foreign sales operations, its ability to improve
cost competitiveness, customer preferences, changes in market conditions in the industries in which
it operates, changes in general economic conditions and customer behavior, forecasts regarding the
timing and scope of the economic recovery in its markets, and its acquisition strategy are
forward-looking statements. Because they are forward-looking, they should be evaluated in light of
important risk factors and uncertainties. These risk factors and uncertainties are more fully
described in Graham Corporation’s most recent Annual and Quarterly Reports filed with the
Securities and Exchange Commission, including under the heading entitled “Risk Factors.”
Should one or more of these risks or uncertainties materialize, or should any of Graham
Corporation’s underlying assumptions prove incorrect, actual results may vary materially from those
currently anticipated. In addition, undue reliance should not be placed on Graham Corporation’s
forward-looking statements. Except as required by law, Graham Corporation disclaims any obligation
to update or publicly announce any revisions to any of the forward-looking statements contained in
this press release.
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For more information contact: |
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Jeffrey Glajch, Vice President — Finance and CFO
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Deborah K. Pawlowski, Kei Advisors LLC |
Phone: (585) 343-2216
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Phone: (716) 843-3908 |
Email: jglajch@graham-mfg.com
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Email: dpawlowski@keiadvisors.com |
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