false--03-3100007163142023Q1One YearP1Y.333P3Y0000716314ghm:PerformanceVestOneThirdPerYearPercentageMemberghm:OfficersAndKeyEmployeesMember2023-04-012023-06-3000007163142022-03-310000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-03-310000716314ghm:EmployeeStockPurchasePlanMember2022-04-012022-06-300000716314ghm:TechnologyAndTechnicalKnowHowMember2023-04-012023-06-300000716314ghm:FiveYearTermLoanWithBankOfAmericaMember2021-06-010000716314us-gaap:TradeNamesMember2023-06-300000716314ghm:BacklogMember2023-06-300000716314us-gaap:AccumulatedTranslationAdjustmentMember2022-06-3000007163142022-04-012022-06-300000716314ghm:CustomerDepositsMember2023-03-310000716314ghm:PerformanceVestedPerformanceStockUnitsPsuMember2022-04-012022-06-300000716314us-gaap:TradeNamesMember2023-04-012023-06-3000007163142023-08-030000716314ghm:EmployeeStockPurchasePlanMember2023-06-300000716314ghm:CustomerDepositsMember2023-06-300000716314us-gaap:RevolvingCreditFacilityMember2023-06-300000716314ghm:BacklogMember2023-04-012023-06-300000716314us-gaap:AccumulatedTranslationAdjustmentMember2023-04-012023-06-300000716314ghm:OfficersAndKeyEmployeesMemberghm:TimeVestOneThirdPerYearPercentageMember2022-04-012022-06-300000716314ghm:OfficersAndKeyEmployeesMemberghm:TimeVestedRestrictedStockUnitsRsusMember2023-04-012023-06-300000716314us-gaap:TreasuryStockCommonMember2022-03-310000716314us-gaap:CommonStockMember2022-06-300000716314srt:MaximumMember2021-06-012021-06-010000716314ghm:OfficersAndKeyEmployeesMember2023-04-012023-06-300000716314us-gaap:TreasuryStockCommonMember2023-06-300000716314us-gaap:LetterOfCreditMember2023-06-300000716314ghm:RefiningMember2023-04-012023-06-300000716314us-gaap:LineOfCreditMember2023-03-310000716314us-gaap:AdditionalPaidInCapitalMember2023-06-300000716314us-gaap:CustomerRelationshipsMember2023-03-310000716314srt:SouthAmericaMember2023-04-012023-06-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000716314us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-04-012023-06-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000716314us-gaap:RetainedEarningsMember2023-04-012023-06-300000716314us-gaap:RestrictedStockMember2023-04-012023-06-300000716314srt:MinimumMember2021-06-012021-06-010000716314country:US2022-04-012022-06-300000716314srt:MinimumMember2021-06-010000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-06-300000716314us-gaap:TreasuryStockCommonMember2022-04-012022-06-300000716314us-gaap:TreasuryStockCommonMember2023-03-310000716314us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMember2021-06-012021-06-010000716314us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-04-012022-06-300000716314srt:DirectorMember2023-04-012023-06-300000716314ghm:SpaceMember2023-04-012023-06-300000716314us-gaap:EarliestTaxYearMemberus-gaap:StateAndLocalJurisdictionMember2023-04-012023-06-300000716314us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMembersrt:MinimumMember2021-06-012021-06-010000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000716314us-gaap:ForeignCountryMemberus-gaap:LatestTaxYearMemberus-gaap:StateAdministrationOfTaxationChinaMember2023-04-012023-06-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000716314srt:MaximumMemberghm:TwoThousandIncentivePlanMemberus-gaap:StockCompensationPlanMember2023-06-300000716314ghm:TwoThousandIncentivePlanMemberghm:StockCompensationPriorPlanMember2023-06-300000716314ghm:TechnologyAndTechnicalKnowHowMember2023-06-300000716314ghm:FloorRateMemberus-gaap:LineOfCreditMember2021-06-012021-06-010000716314country:US2023-04-012023-06-300000716314us-gaap:LineOfCreditMember2021-06-010000716314country:CA2023-04-012023-06-300000716314ghm:OfficersAndKeyEmployeesMemberghm:TimeVestedRestrictedStockUnitsRsusMember2022-04-012022-06-300000716314us-gaap:MiddleEastMember2022-04-012022-06-3000007163142023-04-012023-06-300000716314ghm:RefiningMember2022-04-012022-06-300000716314us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMembersrt:MaximumMember2021-06-012021-06-010000716314ghm:BankOfAmericaTermLoanMember2023-06-300000716314ghm:BankOfAmericaMember2023-04-012023-06-300000716314ghm:TimeVestedRestrictedStockUnitsRsusMember2022-04-012022-06-3000007163142023-03-3100007163142024-01-01srt:MaximumMember2023-06-3000007163142021-06-012021-06-010000716314us-gaap:AccumulatedTranslationAdjustmentMember2023-06-300000716314ghm:EmployeeStockPurchasePlanMember2023-04-012023-06-300000716314us-gaap:AdditionalPaidInCapitalMember2022-06-300000716314ghm:BloombergShortTermBankYieldIndexMemberus-gaap:LineOfCreditMember2021-06-012021-06-010000716314us-gaap:ForeignCountryMemberus-gaap:EarliestTaxYearMemberus-gaap:StateAdministrationOfTaxationChinaMember2023-04-012023-06-300000716314ghm:PerformanceVestOneThirdPerYearPercentageMemberghm:OfficersAndKeyEmployeesMember2022-04-012022-06-300000716314us-gaap:LineOfCreditMember2023-04-012023-06-300000716314srt:DirectorMemberghm:TimeVestedRestrictedStockUnitsRsusMember2023-04-012023-06-3000007163142023-06-300000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-06-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300000716314ghm:OfficersAndKeyEmployeesMemberghm:PerformanceVestedPerformanceStockUnitsPsuMember2022-04-012022-06-300000716314ghm:AllOtherCountriesMember2023-04-012023-06-300000716314srt:SouthAmericaMember2022-04-012022-06-300000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-04-012023-06-300000716314us-gaap:ForeignCountryMemberus-gaap:LatestTaxYearMemberus-gaap:MinistryOfFinanceIndiaMember2023-04-012023-06-300000716314us-gaap:AdditionalPaidInCapitalMember2023-03-310000716314us-gaap:RetainedEarningsMember2022-03-310000716314us-gaap:RetainedEarningsMember2022-04-012022-06-300000716314us-gaap:RestrictedStockMember2022-04-012022-06-300000716314us-gaap:CommonStockMember2023-03-310000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310000716314us-gaap:TreasuryStockCommonMember2022-06-300000716314us-gaap:LetterOfCreditMember2023-03-310000716314srt:MaximumMember2023-01-012023-06-300000716314ghm:ChemicalPetrochemicalMember2022-04-012022-06-300000716314ghm:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialGainLossesMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000716314srt:DirectorMemberghm:TimeVestedRestrictedStockUnitsRsusMember2022-04-012022-06-300000716314us-gaap:RetainedEarningsMember2022-06-3000007163142024-01-01srt:MinimumMember2023-06-300000716314us-gaap:AccumulatedTranslationAdjustmentMember2022-03-310000716314us-gaap:LetterOfCreditMember2021-06-012021-06-010000716314ghm:DefenseMember2023-04-012023-06-300000716314ghm:SpaceMember2022-04-012022-06-300000716314us-gaap:RetainedEarningsMember2023-06-300000716314us-gaap:CommonStockMember2023-04-012023-06-300000716314ghm:TechnologyAndTechnicalKnowHowMember2023-03-310000716314ghm:LetterOfCreditSecuredByCashMember2021-06-012021-06-010000716314us-gaap:PrimeRateMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMember2021-06-012021-06-010000716314ghm:OtherCommercialMember2023-04-012023-06-300000716314srt:DirectorMemberghm:PerformanceVestedPerformanceStockUnitsPsuMember2022-04-012022-06-300000716314us-gaap:CommonStockMember2023-06-300000716314us-gaap:MiddleEastMember2023-04-012023-06-300000716314srt:AsiaMember2023-04-012023-06-300000716314us-gaap:RestrictedStockUnitsRSUMember2022-04-012022-06-300000716314ghm:BloombergShortTermBankYieldIndexMemberghm:FiveYearTermLoanWithBankOfAmericaMember2021-06-012021-06-0100007163142022-06-300000716314ghm:TwoThousandIncentivePlanMemberus-gaap:EmployeeStockOptionMember2020-08-112020-08-110000716314us-gaap:AdditionalPaidInCapitalMember2022-03-310000716314us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300000716314us-gaap:LineOfCreditMember2023-06-300000716314us-gaap:LetterOfCreditMemberghm:HSBCBankUSAMember2021-06-010000716314ghm:HSBCBankUSAMember2023-03-310000716314us-gaap:DomesticCountryMemberus-gaap:LatestTaxYearMember2023-04-012023-06-300000716314us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000007163142024-01-012023-06-300000716314ghm:ChemicalPetrochemicalMember2023-04-012023-06-300000716314ghm:PerformanceVestedPerformanceStockUnitsPsuMember2023-04-012023-06-300000716314ghm:EmployeeStockPurchasePlanMember2022-04-012022-06-300000716314srt:DirectorMemberghm:PerformanceVestedPerformanceStockUnitsPsuMember2023-04-012023-06-300000716314ghm:AllOtherCountriesMember2022-04-012022-06-300000716314us-gaap:RestrictedStockUnitsRSUMember2023-04-012023-06-300000716314srt:AsiaMember2022-04-012022-06-300000716314us-gaap:CommonStockMember2022-04-012022-06-300000716314us-gaap:CustomerRelationshipsMember2023-04-012023-06-300000716314us-gaap:RetainedEarningsMember2023-03-310000716314us-gaap:AccumulatedTranslationAdjustmentMember2023-03-310000716314ghm:TimeVestedRestrictedStockUnitsRsusMember2023-04-012023-06-300000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-04-012022-06-300000716314us-gaap:TreasuryStockCommonMember2023-04-012023-06-300000716314ghm:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialGainLossesMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300000716314us-gaap:ForeignCountryMemberus-gaap:EarliestTaxYearMemberus-gaap:MinistryOfFinanceIndiaMember2023-04-012023-06-300000716314ghm:OfficersAndKeyEmployeesMemberghm:TimeVestOneThirdPerYearPercentageMember2023-04-012023-06-300000716314ghm:OtherCommercialMember2022-04-012022-06-300000716314us-gaap:LatestTaxYearMemberus-gaap:StateAndLocalJurisdictionMember2023-04-012023-06-300000716314ghm:FloorRateMemberghm:FiveYearTermLoanWithBankOfAmericaMember2021-06-012021-06-010000716314us-gaap:AccumulatedTranslationAdjustmentMember2022-04-012022-06-300000716314ghm:FiveYearTermLoanWithBankOfAmericaMember2021-06-012021-06-010000716314us-gaap:CommonStockMember2022-03-310000716314ghm:BankOfAmericaTermLoanMember2023-03-310000716314country:CA2022-04-012022-06-300000716314us-gaap:CustomerRelationshipsMember2023-06-300000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-03-310000716314ghm:DefenseMember2022-04-012022-06-300000716314us-gaap:DomesticCountryMemberus-gaap:EarliestTaxYearMember2023-04-012023-06-30iso4217:USDxbrli:sharesxbrli:purexbrli:sharesiso4217:USD

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ___________

Commission File Number 001-08462

 

GRAHAM CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

16-1194720

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

20 Florence Avenue, Batavia, New York

14020

(Address of principal executive offices)

(Zip Code)

585-343-2216

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, Par Value $0.10 Per Share

 

GHM

 

NYSE

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

  ☐

Accelerated filer

  ☒

Non-accelerated filer

  ☐

 

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No

As of August 3, 2023, there were outstanding 10,702,920 shares of the registrant’s common stock, par value $0.10 per share.

 

 


Graham Corporation and Subsidiaries

Index to Form 10-Q

As of June 30, 2023 and March 31, 2023 and for the three months ended June 30, 2023 and 2022

 

 

 

Page

Part I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Unaudited Condensed Consolidated Financial Statements

3

 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

16

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

 

 

 

Item 4.

Controls and Procedures

26

 

 

 

Part II.

OTHER INFORMATION

 

 

 

 

Item 1A.

Risk Factors

27

 

 

 

Item 6.

Exhibits

28

 

 

 

Signatures

29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2


GRAHAM CORPORATION AND SUBSIDIARIES

FORM 10-Q

JUNE 30, 2023

PART I – FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar amounts in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

 

 

June 30,

 

 

 

2023

 

 

2022

 

Net sales

 

$

47,569

 

 

$

36,075

 

Cost of products sold

 

 

36,592

 

 

 

29,331

 

Gross profit

 

 

10,977

 

 

 

6,744

 

Other expenses and income:

 

 

 

 

 

 

Selling, general and administrative

 

 

7,019

 

 

 

5,485

 

Selling, general and administrative – amortization

 

 

274

 

 

 

274

 

Operating income

 

 

3,684

 

 

 

985

 

Other expense (income), net

 

 

93

 

 

 

(63

)

Interest expense, net

 

 

185

 

 

 

157

 

Income before provision for income taxes

 

 

3,406

 

 

 

891

 

Provision for income taxes

 

 

766

 

 

 

215

 

Net income

 

$

2,640

 

 

$

676

 

Per share data

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

Net income

 

$

0.25

 

 

$

0.06

 

Diluted:

 

 

 

 

 

 

Net income

 

$

0.25

 

 

$

0.06

 

Weighted average common shares
  outstanding:

 

 

 

 

 

 

Basic

 

 

10,653

 

 

 

10,610

 

Diluted

 

 

10,719

 

 

 

10,630

 

 

See Notes to Condensed Consolidated Financial Statements.

3


GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollar amounts in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

June 30,

 

 

 

2023

 

 

2022

 

Net income

 

$

2,640

 

 

$

676

 

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(252

)

 

 

(343

)

Defined benefit pension and other postretirement plans net
 of income tax expense of $
47 and $37, respectively

 

 

164

 

 

 

131

 

Total other comprehensive loss

 

 

(88

)

 

 

(212

)

Total comprehensive income

 

$

2,552

 

 

$

464

 

 

See Notes to Condensed Consolidated Financial Statements.

 

4


GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except per share data)

(Unaudited)

 

 

June 30, 2023

 

 

March 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,662

 

 

$

18,257

 

Trade accounts receivable, net of allowances ($1,878 and $1,841 at June 30 and
   March 31, 2023, respectively)

 

 

29,544

 

 

 

24,000

 

Unbilled revenue

 

 

34,467

 

 

 

39,684

 

Inventories

 

 

25,490

 

 

 

26,293

 

Prepaid expenses and other current assets

 

 

2,675

 

 

 

1,534

 

Income taxes receivable

 

 

509

 

 

 

302

 

      Total current assets

 

 

117,347

 

 

 

110,070

 

Property, plant and equipment, net

 

 

25,910

 

 

 

25,523

 

Prepaid pension asset

 

 

6,179

 

 

 

6,107

 

Operating lease assets

 

 

8,071

 

 

 

8,237

 

Goodwill

 

 

23,523

 

 

 

23,523

 

Customer relationships, net

 

 

10,571

 

 

 

10,718

 

Technology and technical know-how, net

 

 

9,048

 

 

 

9,174

 

Other intangible assets, net

 

 

7,438

 

 

 

7,610

 

Deferred income tax asset

 

 

1,792

 

 

 

2,798

 

Other assets

 

 

149

 

 

 

158

 

Total assets

 

$

210,028

 

 

$

203,918

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of long-term debt

 

$

2,000

 

 

$

2,000

 

Current portion of finance lease obligations

 

 

26

 

 

 

29

 

Accounts payable

 

 

15,085

 

 

 

20,222

 

Accrued compensation

 

 

10,334

 

 

 

10,401

 

Accrued expenses and other current liabilities

 

 

5,706

 

 

 

6,434

 

Customer deposits

 

 

56,016

 

 

 

46,042

 

Operating lease liabilities

 

 

1,114

 

 

 

1,022

 

Income taxes payable

 

 

62

 

 

 

16

 

Total current liabilities

 

 

90,343

 

 

 

86,166

 

Long-term debt

 

 

9,303

 

 

 

9,744

 

Finance lease obligations

 

 

77

 

 

 

85

 

Operating lease liabilities

 

 

7,278

 

 

 

7,498

 

Deferred income tax liability

 

 

1

 

 

 

108

 

Accrued pension and postretirement benefit liabilities

 

 

1,337

 

 

 

1,342

 

Other long-term liabilities

 

 

1,968

 

 

 

2,042

 

Total liabilities

 

 

110,307

 

 

 

106,985

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $1.00 par value, 500 shares authorized

 

 

 

 

 

 

Common stock, $0.10 par value, 25,500 shares authorized, 10,818 and 10,774 shares
     issued and
10,675 and 10,635 shares outstanding at June 30 and March 31, 2023,
     respectively

 

 

1,082

 

 

 

1,075

 

Capital in excess of par value

 

 

28,641

 

 

 

28,061

 

Retained earnings

 

 

80,083

 

 

 

77,443

 

Accumulated other comprehensive loss

 

 

(7,551

)

 

 

(7,463

)

Treasury stock (143 and 138 shares at June 30 and March 31, 2023, respectively)

 

 

(2,534

)

 

 

(2,183

)

Total stockholders’ equity

 

 

99,721

 

 

 

96,933

 

Total liabilities and stockholders’ equity

 

$

210,028

 

 

$

203,918

 

See Notes to Condensed Consolidated Financial Statements.

5


GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

(Unaudited)

 

 

Three Months Ended

 

 

 

June 30,

 

 

 

2023

 

 

2022

 

Operating activities:

 

 

 

Net income

 

$

2,640

 

 

$

676

 

Adjustments to reconcile net income to net cash provided (used) by operating
   activities:

 

 

 

 

 

 

Depreciation

 

 

793

 

 

 

856

 

Amortization of intangible assets

 

 

446

 

 

 

619

 

Amortization of actuarial losses

 

 

211

 

 

 

168

 

Amortization of debt issuance costs

 

 

59

 

 

 

34

 

Equity-based compensation expense

 

 

293

 

 

 

114

 

Deferred income taxes

 

 

855

 

 

 

225

 

(Increase) decrease in operating assets:

 

 

 

 

 

 

Accounts receivable

 

 

(5,769

)

 

 

(34

)

Unbilled revenue

 

 

5,171

 

 

 

(2,580

)

Inventories

 

 

780

 

 

 

(930

)

Prepaid expenses and other current and non-current assets

 

 

(1,065

)

 

 

(745

)

Income taxes receivable

 

 

(159

)

 

 

(6

)

Operating lease assets

 

 

293

 

 

 

467

 

Prepaid pension asset

 

 

(72

)

 

 

(163

)

Increase (decrease) in operating liabilities:

 

 

 

 

 

 

Accounts payable

 

 

(4,745

)

 

 

3,016

 

Accrued compensation, accrued expenses and other current and non-current
   liabilities

 

 

(868

)

 

 

(878

)

Customer deposits

 

 

10,002

 

 

 

(504

)

Operating lease liabilities

 

 

(256

)

 

 

(431

)

Long-term portion of accrued compensation, accrued pension and
   postretirement benefit liabilities

 

 

(6

)

 

 

(593

)

Net cash provided (used) by operating activities

 

 

8,603

 

 

 

(689

)

Investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(1,499

)

 

 

(284

)

Net cash used by investing activities

 

 

(1,499

)

 

 

(284

)

Financing activities:

 

 

 

 

 

 

Principal repayments on debt

 

 

(500

)

 

 

(2,500

)

Proceeds from the issuance of debt

 

 

 

 

 

2,000

 

Principal repayments on finance lease obligations

 

 

(11

)

 

 

(6

)

Repayments on financing lease obligations

 

 

(74

)

 

 

(67

)

Payment of debt issuance costs

 

 

 

 

 

(122

)

Purchase of treasury stock

 

 

(57

)

 

 

(22

)

Net cash used by financing activities

 

 

(642

)

 

 

(717

)

Effect of exchange rate changes on cash

 

 

(57

)

 

 

(146

)

Net increase (decrease) in cash and cash equivalents

 

 

6,405

 

 

 

(1,836

)

Cash and cash equivalents at beginning of period

 

 

18,257

 

 

 

14,741

 

Cash and cash equivalents at end of period

 

$

24,662

 

 

$

12,905

 

 

See Notes to Condensed Consolidated Financial Statements.

 

6


GRAHAM CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 

(Dollar amounts in thousands)

 

(Unaudited)

 

 

 

Common Stock

 

 

Capital in

 

 

 

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

 

 

 

 

Par

 

 

Excess of

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Par Value

 

 

Earnings

 

 

Loss

 

 

Stock

 

 

Equity

 

Balance at April 1, 2023

 

 

10,774

 

 

$

1,075

 

 

$

28,061

 

 

$

77,443

 

 

$

(7,463

)

 

$

(2,183

)

 

$

96,933

 

Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

2,640

 

 

 

(88

)

 

 

 

 

 

2,552

 

Issuance of shares

 

 

53

 

 

 

8

 

 

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of shares

 

 

(9

)

 

 

(1

)

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Recognition of equity-based
  compensation expense

 

 

 

 

 

 

 

 

293

 

 

 

 

 

 

 

 

 

 

 

 

293

 

Issuance of treasury stock

 

 

 

 

 

 

 

 

294

 

 

 

 

 

 

 

 

 

(294

)

 

 

 

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(57

)

 

 

(57

)

Balance at June 30, 2023

 

 

10,818

 

 

$

1,082

 

 

$

28,641

 

 

$

80,083

 

 

$

(7,551

)

 

$

(2,534

)

 

$

99,721

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Capital in

 

 

 

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

 

 

 

 

Par

 

 

Excess of

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Par Value

 

 

Earnings

 

 

Loss

 

 

Stock

 

 

Equity

 

Balance at April 1, 2022

 

 

10,801

 

 

$

1,080

 

 

$

27,770

 

 

$

77,076

 

 

$

(6,471

)

 

$

(2,961

)

 

$

96,494

 

Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

676

 

 

 

(212

)

 

 

 

 

 

464

 

Forfeiture of shares

 

 

(32

)

 

 

(3

)

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

Recognition of equity-based
  compensation expense

 

 

 

 

 

 

 

 

114

 

 

 

 

 

 

 

 

 

 

 

 

114

 

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

(21

)

Balance at June 30, 2022

 

 

10,769

 

 

$

1,077

 

 

$

27,887

 

 

$

77,752

 

 

$

(6,683

)

 

$

(2,982

)

 

$

97,051

 

 

 

See Notes to Condensed Consolidated Financial Statements.

7


GRAHAM CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except per share data)

 

NOTE 1 – BASIS OF PRESENTATION:

Graham Corporation's (the "Company's") Condensed Consolidated Financial Statements include its wholly-owned subsidiaries located in Arvada, Colorado, Suzhou, China and Ahmedabad, India at June 30 and March 31, 2023. The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X, each as promulgated by the U.S. Securities and Exchange Commission. The Company's Condensed Consolidated Financial Statements do not include all information and notes required by GAAP for complete financial statements. The unaudited Condensed Consolidated Balance Sheet as of March 31, 2023 presented herein was derived from the Company’s audited Consolidated Balance Sheet as of March 31, 2023. For additional information, please refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023 ("fiscal 2023"). In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair presentation, have been included in the Company's Condensed Consolidated Financial Statements.

The Company's results of operations and cash flows for the three months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the current fiscal year, which ends March 31, 2024 ("fiscal 2024").

 

NOTE 2 – REVENUE RECOGNITION:

The Company recognizes revenue on contracts when or as it satisfies a performance obligation by transferring control of the product to the customer. For contracts in which revenue is recognized upon shipment, control is generally transferred when products are shipped, title is transferred, significant risks of ownership have transferred, the Company has rights to payment, and rewards of ownership pass to the customer. For contracts in which revenue is recognized over time, control is generally transferred as the Company creates an asset that does not have an alternative use to the Company and the Company has an enforceable right to payment for the performance completed to date.

The following table presents the Company’s revenue disaggregated by product line and geographic area:

 

 

 

 

Three Months Ended

 

 

 

June 30,

 

Market

 

2023

 

 

2022

 

Refining

 

$

6,867

 

 

$

7,875

 

Chemical/Petrochemical

 

 

6,041

 

 

 

5,875

 

Defense

 

 

22,817

 

 

 

9,800

 

Space

 

 

4,822

 

 

 

6,462

 

Other Commercial

 

 

7,022

 

 

 

6,063

 

Net sales

 

$

47,569

 

 

$

36,075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic Area

 

 

 

 

 

 

Asia

 

$

5,902

 

 

$

4,248

 

Canada

 

 

899

 

 

 

997

 

Middle East

 

 

1,049

 

 

 

459

 

South America

 

 

27

 

 

 

1,461

 

U.S.

 

 

38,141

 

 

 

28,169

 

All other

 

 

1,551

 

 

 

741

 

Net sales

 

$

47,569

 

 

$

36,075

 

A performance obligation represents a promise in a contract to provide a distinct good or service to a customer. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Transaction price reflects the amount of consideration to which the Company expects to be entitled in exchange for transferred products. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized as the performance obligation is satisfied. In certain

8


cases, the Company may separate a contract into more than one performance obligation, while in other cases, several products may be part of a fully integrated solution and are bundled into a single performance obligation. If a contract is separated into more than one performance obligation, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods underlying each performance obligation. The Company has made an accounting policy election to exclude from the measurement of the contract price all taxes assessed by government authorities that are collected by the Company from its customers. The Company does not adjust the contract price for the effects of a financing component if the Company expects, at contract inception, that the period between when a product is transferred to a customer and when the customer pays for the product will be one year or less. Shipping and handling fees billed to the customer are recorded in revenue and the related costs incurred for shipping and handling are included in Cost of products sold.

The Company recognizes revenue over time when contract performance results in the creation of a product for which the Company does not have an alternative use and the contract includes an enforceable right to payment in an amount that corresponds directly with the value of the performance completed. To measure progress towards completion on performance obligations for which revenue is recognized over time the Company utilizes an input method based upon a ratio of direct labor hours incurred to date to management’s estimate of the total labor hours to be incurred on each contract, an input method based upon a ratio of total contract costs incurred to date to management’s estimate of the total contract costs to be incurred or an output method based upon completion of operational milestones, depending upon the nature of the contract. The Company has established the systems and procedures essential to developing the estimates required to account for performance obligations over time. These procedures include monthly review by management of costs incurred, progress towards completion, identified risks and opportunities, sourcing determinations, changes in estimates of costs yet to be incurred, availability of materials, and execution by subcontractors. Sales and earnings are adjusted in current accounting periods based on revisions in the contract value due to pricing changes and estimated costs at completion. Losses on contracts are recognized immediately when evident to management. Revenue on the majority of the Company's contracts, as measured by number of contracts, is recognized upon shipment to the customer. Revenue on larger contracts, which are fewer in number but represent the majority of the revenue, is recognized over time. The following table presents the Company's revenue percentages disaggregated by revenue recognized over time or upon shipment:

 

 

Three Months Ended

 

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Revenue recognized over time

 

 

81

%

 

 

65

%