Graham Corp.’s fourth-quarter profits tumbled by 43 percent as the Batavia manufacturer’s international sales plunged, mainly from weakness in its key oil refinery market.
But Graham executives also warned against reading too much into quarterly fluctuations in the company’s sales and profits, which can be affected considerably by the timing of a handful of orders. They said they expect the company’s sales to grow by 17 percent to 27 percent during the current fiscal year, which runs through March 2015.
“I believe that our markets are poised for expansion,” said James R. Lines, Graham’s president and chief executive officer. “Our pipeline continues to be more robust than in past cycles.”
Graham said its profits during the fourth quarter dropped to $2.3 million, or 23 cents per share, from $4.1 million, or 41 cents per share, a year ago, as the company’s lower revenues and a less profitable mix of product sales cut into its earnings.
The company’s sales dropped by 16 percent to $26.1 million during the quarter that ended in March, down from $30.9 million a year ago.
All of the drop came from Graham’s international markets, especially in Asia and the Middle East, where revenues tumbled by 60 percent to $5.8 million, or 22 percent of the company’s total sales. The weakness was mainly centered in Graham’s oil refinery market, where revenues dropped by $7.9 million during the quarter.
Graham’s U.S. sales, which accounted for 78 percent of the company’s total revenues, grew by 24 percent, mainly on strength from the customers in the chemical industry, where overall revenues more than doubled to $10.5 million. Sales to the power industry weakened by $2.4 million during the quarter.
Still, Graham expects its sales to keep growing during the current fiscal year, forecasting that its revenues will range between $120 million and $130 million, up from $102.2 million during the fiscal year that ended in March. Much of that growth will be fueled by an expected pickup in orders through the next three to six months, Lines said.
Graham, which spent $5.3 million on capital projects last year, mainly on its expansion project at its Batavia factory, said it expects to spend another $5.5 million to $6 million on capital investments during the current year. About 60 percent of that money is expected to go toward the Batavia expansion, which is scheduled to be completed by the end of the summer. Because of the expansion and the expected growth in sales, Lines said Graham likely will add about 20 new hires this year to its current work force of about 400 people.
“We’re going to have strong growth, and the market fundamentals and the investments we’ve made in our business are coming together at the right time,” Lines said.
Graham also said it had won four orders, worth a combined $10 million, to upgrade the ejector systems the company previously made for three oil refineries, along with a Gulf Coast ethylene plant expansion project. Two of the refinery projects are for refineries in the Canadian oil sands region, while the other is in the United States.
“We do have confidence that others will be secured,” through the summer, Lines said.