A surge in international sales fueled an 86 percent jump in Graham Corp.’s third-quarter profits, although the Batavia manufacturer warned that delays in nuclear power projects would cause its sales to grow slower than it initially forecast.
Even so, Graham’s earnings easily topped analyst forecasts, and the company still expects its sales for the entire fiscal year, which ends in March, to be almost 2 percent higher than they were the year before.
“We remain optimistic in both the long-term outlook in our markets and our ability to achieve our goal of over $200 million in annual revenue in this next cycle,” said James R. Lines, Graham’s president and chief executive officer, in a statement Friday.
Graham’s profits jumped to $3 million, or 30 cents per share, compared with $1.6 million, or 16 cents per share, a year ago. The third-quarter earnings were inflated by $975,000, or 10 cents a share, because the company was able to eliminate a reserve that it had created in case the Energy Steel nuclear power components business it acquired two years ago met sales and earnings targets that would have triggered an additional payment to its former owners. Energy Steel, which hit its targets during its first year under Graham’s ownership, fell short during the second year.
Excluding the elimination of the reserve, Graham’s profits rose 26 percent to $2.1 million, or 21 cents per share.
With the nuclear project delays expected to last for several quarters, Graham reduced its sales forecast for the current fiscal year to a midpoint of $105 million, down from its previous forecast of $110 million but still slightly better than its $103 million in revenues during the previous fiscal year.
The company’s sales rose by 5 percent to $25.6 million during the quarter that ended in December, up from $24.3 million a year ago, as a 37 percent jump in international revenue offset weakness in its U.S. markets, where sales slid by 18 percent because of delays on work on new nuclear power plants, as well as a key U.S. Navy contract for nuclear propulsion systems.
Graham’s sales for oil refinery projects remained robust, jumping by 45 percent to $10.9 million, or 43 percent of the revenues during the quarter. Sales for chemical and petrochemical projects also were strong, rising by 38 percent to $6.5 million. Those gains offset a 37 percent drop in power projects, which slid to $4.1 million.
Graham booked $24.6 million in new orders during the quarter, up 12 percent from $21.9 million a year ago, but down 4 percent from $25.6 million during the quarter that ended in September. Orders from refinery projects surged, while orders from the power market fell by 54 percent.
Graham’s backlog of orders stood at $90.7 million at the end of December, down 1 percent from September, but 25 percent higher than it was at the end of 2011.
“The order release pattern for the early stages of the recovery in our markets has been somewhat unusual, with bidding activity building nicely, while at the same time, there has been an inconsistent release of orders,” Lines said.
Graham also said it is increasing its dividend by 50 percent, boosting its annual payment to 3 cents a share from the current rate of 2 cents per share.