Flat sales and a less-lucrative sales mix caused Graham Corp.’s first-quarter profits to tumble by 37 percent, although company executives still think the Batavia manufacturer’s revenue growth will pick up over the rest of the year.
Graham said its profits fell to $2.4 million, or 24 cents per share, from $3.8 million, or 38 cents per share, a year ago.
Company officials blamed the drop on a changing mix of sales that cut deeply into the profitability of Graham’s revenue base, slashing the firm’s operating profit margin to 12.6 percent from 19.9 percent a year ago.
Graham’s sales inched up by 1 percent to $28.5 million during the quarter that ended in June, up from $28.3 million a year ago.
But the mix of those sales shifted dramatically. Sales of products used in refineries tumbled by 48 percent to $6.6 million, or 23 percent of Graham’s total revenues, down from $12.6 million, or 45 percent of sales, a year ago. At the same time, sales to the chemical and petrochemical industry more than doubled to $11.7 million, or 41 percent of sales, from $4.6 million, or 16 percent of sales, a year ago. Revenues from the power generation industry jumped by 57 percent to $4.9 million.
“We remain in the early stages of a recovery in our markets,” said James R. Lines, Graham’s president and chief executive officer. “The recovery appears to be steadily advancing.”
Despite the flat first-quarter revenues, Graham said it still expects its sales this year to range between $120 million and $130 million, which would be a 17 percent to 27 percent increase from $102.2 million last year. The company also said it still thinks the profitability of those sales during the rest of the year will increase from the depressed first-quarter levels.
Graham’s first-quarter profits also were depressed by the $2.6 million it spent on its project to expand the capacity of its 400-employee Batavia factory, which is expected to be completed by the end of the summer.