EXHIBIT 99.1
[GRAHAM ENGINEERING ANSWERS LOGO] NEWS RELEASE
GRAHAM CORPORATION 20 Florence Avenue Batavia, NY 14020
IMMEDIATE RELEASE
GRAHAM CORPORATION REPORTS FOURTH QUARTER 2005 SALES INCREASE 37.5%
IMPROVING DEMAND DRIVEN BY THREE GLOBAL TRENDS:
- INCREASING NUMBER OF OIL REFINERIES
- ADDITION OF SYSTEMS TO TREAT HEAVY CRUDE OIL
- GROWING NUMBER OF PETROCHEMICAL PROCESSING PLANTS
DEMAND ALSO POSITIVELY IMPACTED BY EPA REGULATIONS FOR LOWER SULFUR
TRANSPORTATION FUEL
BATAVIA, NY, June 06, 2005 - Graham Corporation (AMEX: GHM), a global designer,
manufacturer, and supplier of ejectors, pumps, condensers, vacuum systems and
heat exchangers for the oil refining, petrochemical and power generation
industries, today reported results for the fourth quarter and fiscal year ended
March 31, 2005. Sales for the fourth quarter were up 37.5% to $13.2 million
compared with $9.6 million in the same period last year. Income from continuing
operations for the fourth quarter was $743 thousand compared with $140 thousand
in the same period last year. Diluted earnings per share from continuing
operations of $0.42 were up $0.34 compared with $0.08 from the prior year.
Sales were driven by the increasing global demand for oil and oil by-products.
This demand, coupled with higher prices on sweet crude oil, has caused
refineries and petrochemical plants to invest in new plants and upgrades of
existing plants around the world in order to use lower cost heavy sulfur crude
as their raw material source. Additionally, with Environmental Protection Agency
standards in the U.S. requiring lower sulfur content in transportation fuel
beginning in 2006, refineries are upgrading their processing facilities to
address improved sulfur reduction. Graham's global presence and its reputation
for providing quality, reliable engineered systems in these fields have driven
demand for its ejectors and condensers.
Gross margins for the quarter were 25%, up from 18.7% in the fourth quarter last
year, reflecting operating leverage on higher volume, increased prices and
improved product mix. Selling, general & administrative expenses remained flat
on an absolute basis at $1.8 million, but declined to 13% of sales in the fourth
quarter of 2005 compared with 19% in the fourth quarter of 2004. Operating
margins from continuing operations for the fourth quarter were 11%, an
improvement from a negative 0.8% in the fourth quarter of last year.
Bill Johnson, President and CEO of Graham Corporation commented, "Our growth in
sales for the fourth quarter reflects the overall increase in demand for
Graham's engineered products that has been growing over the last year and,
specifically, in the last half of fiscal 2005. Also during the year, we were
able to increase prices in order to better address rising material costs and
improve margins."
- MORE -
GRAHAM CORPORATION REPORTS FOURTH QUARTER 2005 SALES INCREASE 37.5%
JUNE 06, 2005
DISCONTINUED OPERATIONS
The Company announced on March 15, 2005 that the Board of Directors approved a
plan to dispose of its U.K. pump manufacturing operations. The loss associated
with the disposal is reflected in the consolidated statement of operations as a
discontinued operation. Prior reporting periods have been restated to reflect
the U.K. operations separately from continuing operations. When considering the
discontinued operations, the net loss for the fourth quarter was $2.3 million,
or a loss of $1.31 per diluted share.
Graham will continue to provide quality pumps and engineered vacuum pump systems
to its global customers, engineering procurement contractors and technology
licensors.
2005 REVIEW
For the fiscal year ended March 31, 2005, sales were $41.3 million, up from
$37.5 million for a 10% increase from the previous fiscal year. Higher revenue
for fiscal 2005 includes increased sales for ejectors and condensers to the oil
refining and petrochemical processing industries and higher demand for heat
transfer products. Gross margins for fiscal 2005 were 18% compared with 16% for
the previous year. Gross margins in the second half of 2005 were 24% compared
with 15% for the first half of the year reflecting improved product mix and
operating leverage.
Income from continuing operations for fiscal 2005 was $296 thousand or $0.17 per
diluted share. This compares with a loss of $832 thousand or $0.51 per diluted
share, for the year ended March 31, 2004. After recognition of the loss from
discontinued operations for its U.K. subsidiaries of $3,202 thousand, the
Company incurred a net loss for fiscal 2005 of $2,906 thousand, or $1.69 per
diluted share. This compares with a net loss of $1,161 thousand for the year
ended March 31, 2004, after recognition of the loss from U.K. discontinued
operations of $329 thousand.
Graham's long-term debt obligations at the end of fiscal 2005 were $44 thousand,
down from $93 thousand at the end of fiscal year 2004. Cash and cash equivalents
at year end were $724 thousand. Capital expenditures for the year were $224
thousand compared with $249 thousand in the previous year.
OUTLOOK
Orders received in the fourth quarter of fiscal 2005 were $13.3 million compared
with $10.3 million in the fourth quarter of 2004, a 29% increase. Fiscal year
2005 orders were $49.9 million, up 47% from the previous fiscal year.
Approximately one-quarter of the increase was attributed to improved demand for
condensers for petrochemical and refinery work. Approximately one-quarter of the
increase related to ejector systems for refinery of ultra-low sulfur diesel,
heavy crude feed stock and general capacity expansion projects. The remainder of
increased demand was spread across other traditional markets, such as power,
HVAC and general industrial. Domestic orders were up 49% and exports have
increased 46% over fiscal 2004.
As of March 31, 2005, backlog was $22.4 million compared with $13.5 million at
2004 fiscal year-end. Approximately 44% of the backlog can be attributed to
equipment for refinery work, 22% to petrochemical projects and 16% to power
generation projects. Approximately 37% of the backlog will be delivered to North
America, 32% to Asia and 11% to Middle Eastern markets. Profit margins on orders
in backlog have improved due to price increases and an improved product mix.
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GRAHAM CORPORATION REPORTS FOURTH QUARTER 2005 SALES INCREASE 37.5%
JUNE 06, 2005
Bill Johnson further added, "Our global opportunities have significantly
improved. The convergence of a number of different economic drivers for our
primary industries around the world is creating excellent opportunities for
Graham for the immediate future. Our strategic development of a global sales
representative network and establishment of sales operations in the U.K.,
serving Europe and the Middle East, and in China, serving all of Asia, will
enable us to build Graham's customer base and expand our market share."
He went on to say, "We have more than sufficient manufacturing capacity to meet
the continued growth in demand. In 2006, we plan approximately $2.0 million in
capital expenditures of which a substantial portion will be directed to both
hardware and software for information management and engineering design systems.
Our objective is to increase our engineering capacity without increasing the
number of engineers on staff. Expanded engineering capacity will enable us to
readily address the increasing volume of inquiries we are receiving for the
Company's products."
Graham is considering the possible sale of 99,000 shares of stock held in
treasury to finance capital spending and general working capital needs in fiscal
2006, in addition to cash generated from operations.
WEBCAST AND CONFERENCE CALL
Graham will host a Fourth Quarter conference call on June 15, 2005 at 8:30 a.m.
ET. The call can be accessed via a live webcast at www.graham-mfg.com.
Participants should go to the website 10 - 15 minutes prior to the scheduled
conference in order to register and download any necessary audio software. The
teleconference can be accessed by calling (877) 407-9039 approximately 5 - 10
minutes prior to the call.
A replay of the call will be available through June 22, 2005 at 11:59 p.m. ET at
(877) 660-6853, by entering account number 3055 and conference ID number 156662.
An archive of the webcast and a transcript of the teleconference will also be
available at www.graham-mfg.com.
ABOUT GRAHAM CORPORATION
A worldwide leader in vacuum technology, Graham designs and builds vacuum and
heat transfer systems for oil refining, petrochemical processing and power
generation industries. Graham's vacuum ejectors and pumps, condensers and heat
exchangers are sold either as components, or as complete systems, to end users,
engineering procurement contractors, technology licensors or independent
distributors around the world.
More information regarding Graham can be found at its website:
www.graham-mfg.com
SAFE HARBOR STATEMENT
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All forward-looking statements
are subject to certain risks, uncertainties and assumptions. These risks and
uncertainties, which are more fully described in Graham's Annual and Quarterly
Reports filed with the Securities and Exchange Commission, include the success
of Grahams' sales operations in Europe and in China, its strategy to build its
global sales representative channel, the effectiveness of automation in
expanding its engineering capacity, the ability to improve its cost
competitiveness, customer preferences and changes in market conditions in the
industries in which the Company operates. Should one or more of these risks or
uncertainties materialize, or should the assumptions prove incorrect, actual
results may vary in material aspects from those currently anticipated.
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GRAHAM CORPORATION REPORTS FOURTH QUARTER 2005 SALES INCREASE 37.5%
JUNE 06, 2005
FOR MORE INFORMATION CONTACT:
J. Ronald Hansen, Vice President Finance and CFO
Phone:(585)343-2216 Email: rhansen@graham-mfg.com
- -OR-
Deborah K. Pawlowski, Kei Advisors LLC
Phone:(716) 843-3908 Email: dpawlowski@keiadvisors.com
TABLES FOLLOW.
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GRAHAM CORPORATION REPORTS FOURTH QUARTER 2005 SALES INCREASE 37.5%
JUNE 06,2005
GRAHAM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED YEAR ENDED
----------------------- -------------------------
($ in thousands, except per share data) 3/31/2005 3/31/2004* 3/31/2005 3/31/2004*
- ---------------------------------------- ---------- ---------- ----------- ----------
Total revenue $ 13,198 $ 9,645 $ 41,333 $ 37,508
Cost of products sold 9,964 7,846 33,793 31,618
Selling, general and administrative 1,778 1,873 7,691 7,805
---------- ---------- ----------- ----------
Operating income 1,456 (74) (151) (1,915)
Interest expense 14 6 33 46
Other income 0 0 (1,592) (522)
Other expense 401 0 1,049 0
---------- ---------- ----------- ----------
Income (Loss) from continuing operations before
income taxes 1,041 (80) 359 (1,439)
Income tax expense (benefit) 298 (220) 63 (607)
---------- ---------- ----------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS 743 140 296 (832)
---------- ---------- ----------- ----------
(Loss) from discontinued operations net of tax (benefit)
of $(1,331) and $(38) for the 2005 and 2004 quarters,
respectively, and $(1,420) and $(167) for 2005 and
2004, respectively. (3,034) (56) (3,202) (329)
---------- ---------- ----------- ----------
NET INCOME (LOSS) $ (2,291) $ 84 $ (2,906) $ (1,161)
---------- ---------- ----------- ----------
Earnings (Loss) per share from continuing operations
Basic $ 0.44 $ 0.08 $ 0.17 $ (0.51)
Diluted $ 0.42 $ 0.08 $ 0.17 $ (0.51)
Earnings (Loss) per share
Basic $ (1.35) $ 0.05 $ (1.73) $ (0.71)
Diluted $ (1.31) $ 0.05 $ (1.69) $ (0.71)
Weighted average shares outstanding
Basic 1,693,692 1,691,075 1,681,990 1,646,701
Diluted 1,751,414 1,685,027 1,716,698 1,646,701
*2004 RESTATED TO REFLECT DISCONTINUED OPERATIONS AND THE CHANGE IN ACCOUNTING
FOR REVENUE RECOGNITION
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GRAHAM CORPORATION REPORTS FOURTH QUARTER 2005 SALES INCREASE 37.5%
JUNE 06, 2005
GRAHAM CORPORATION
CONSOLIDATED BALANCE SHEETS
YEAR ENDED MARCH 31,
($ in thousands) 2005 2004*
- ---------------- -------- --------
ASSETS:
Cash $ 724 $ 467
Investments 1,993 5,296
Net accounts receivable 10,026 8,950
3,620 --
Inventories 4,823 6,984
Other current assets 903 2,710
-------- --------
Total current assets 22,089 24,407
Property, plant and equipment, net 7,649 9,227
Deferred income taxes 3,747 2,048
Other assets 44 58
-------- --------
TOTAL ASSETS $ 33,529 $ 35,740
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Short-term debt and current maturities on long-term debt $ 1,920 $ 1,969
Accounts payable 3,374 3,230
Accrued compensation - current 2,802 3,866
Accrued expenses and other liabilities 1,494 1,562
Customer deposits 1,295 2,128
-------- --------
Total current liabilities 10,885 12,755
Long-term debt 44 93
Accrued compensation 213 239
Accrued pension and postretirement benefits 5,445 4,413
Other liabilities 364 138
-------- --------
TOTAL LIABILITIES 16,951 17,638
-------- --------
Common stock 180 176
Capital in excess of par value 5,553 5,097
Retained earnings 14,082 17,322
Accumulated other comprehensive loss:
Minimum pension liability adjustment (1,698) (1,456)
Cumulative foreign currency translation adjustment (1,452)
-------- --------
18,117 19,687
Less treasury stock (99,123 shares in 2005 and 2004) (1,385) (1,385)
Less notes receivables from officers and directors (154) (200)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 16,578 18,102
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 33,529 $ 35,740
======== ========
*2004 RESTATED TO REFLECT THE CHANGE IN ACCOUNTING FOR REVENUE RECOGNITION BUT
NOT RESTATED TO REFLECT DISCONTINUED OPERATIONS
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GRAHAM CORPORATION REPORTS FOURTH QUARTER 2005 SALES INCREASE 37.5%
JUNE 06, 2005
GRAHAM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
YEAR ENDED MARCH 31,
($ in thousands) 2005 2004*
- ---------------- -------- --------
Operating activities:
Income from continuing operations $ 296 $ (832)
Depreciation and amortization 780 793
Non cash other (income) expense (846) (522)
Net change in accounts receivable (3,249) (1,405)
Net change in unbilled revenue (3,620)
Net change in accounts payable 1,266 (1,557)
Net change in other operating assets and liabilities 979 2,258
-------- --------
NET CASH (USED) BY OPERATING ACTIVITIES (4,394) (1,265)
Investing activities:
Purchase of investments (8,462) (13,209)
Redemption of investments at maturity 11,803 14,408
Other investing activities 46 349
Capital expenditures (224) (249)
-------- --------
NET CASH PROVIDED BY INVESTING ACTIVITIES 3,163 1,299
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 1,884 (91)
-------- --------
Net cash (used) provided by discontinued operations (396) 301
Effect of exchange rate on cash 0 6
-------- --------
Net increase in cash 257 250
Cash at beginning of the year 467 217
-------- --------
Cash at end of period $ 724 $ 467
======== ========
*2004 RESTATED TO REFLECT DISCONTINUED OPERATIONS AND THE CHANGE IN ACCOUNTING
FOR REVENUE RECOGNITION
GRAHAM CORPORATION
OTHER DATA (CONTINUING OPERATIONS)
(unaudited)
($ in thousands) FOR THE QUARTER ENDED FOR THE YEAR ENDED
% INCREASE/
3/31/2005 12/31/2004 3/31/2004 3/31/2005 3/31/2004 (DECREASE)
------------ ------------ ----------- ---------- ---------- -----------
ORDERS $ 13,333 $ 13,953 $ 10,261 $ 49,857 $ 33,826 47%
3/31/2005 12/31/2004 3/31/2004
------------ ------------ -----------
BACKLOG $ 22,376 $ 22,145 $ 13,482
- END -
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