one yearQ2false33.330000716314P1Y33.33--03-31One year0000716314us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-09-300000716314us-gaap:CommonStockMember2021-09-300000716314srt:MinimumMember2022-04-012022-09-300000716314ghm:BarberNicholsIncMember2022-09-3000007163142021-03-310000716314us-gaap:TreasuryStockMember2021-04-012021-06-300000716314srt:SouthAmericaMember2022-04-012022-09-300000716314country:CA2021-04-012021-09-300000716314us-gaap:PrimeRateMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMember2021-06-012021-06-010000716314ghm:OtherCommercialMember2021-07-012021-09-300000716314us-gaap:AccumulatedTranslationAdjustmentMember2021-03-310000716314country:US2021-07-012021-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMemberghm:OfficersAndKeyEmployeesMemberghm:TimeVestedRestrictedStockMember2021-04-012021-06-300000716314us-gaap:PensionPlansDefinedBenefitMember2022-09-300000716314us-gaap:LetterOfCreditMemberghm:HSBCBankUSAMember2021-05-310000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000716314us-gaap:MiddleEastMember2021-07-012021-09-300000716314ghm:BarberNicholsIncMemberghm:BacklogMember2022-04-012022-09-300000716314us-gaap:RevolvingCreditFacilityMember2022-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMember2021-07-012021-09-300000716314us-gaap:LineOfCreditMember2022-09-3000007163142021-06-012021-06-010000716314us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-03-310000716314ghm:BarberNicholsIncMemberus-gaap:TradeNamesMember2022-04-012022-09-300000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-03-310000716314ghm:AllOtherCountriesMember2021-04-012021-09-300000716314us-gaap:OtherOperatingIncomeExpenseMemberghm:TransactionAgreementMember2022-09-300000716314us-gaap:AccumulatedTranslationAdjustmentMember2022-09-300000716314us-gaap:AdditionalPaidInCapitalMember2021-09-300000716314ghm:DefenseMember2021-07-012021-09-300000716314us-gaap:CommonStockMember2021-04-012021-06-300000716314srt:MaximumMembersrt:ScenarioForecastMember2022-04-012023-03-310000716314ghm:SpaceMember2021-07-012021-09-300000716314us-gaap:AccumulatedTranslationAdjustmentMember2022-03-310000716314us-gaap:PensionPlansDefinedBenefitMember2022-07-012022-09-300000716314ghm:DirectorsMember2022-04-012022-09-300000716314us-gaap:TreasuryStockMember2021-03-310000716314us-gaap:LineOfCreditMembersrt:MaximumMember2022-09-300000716314us-gaap:StockCompensationPlanMember2022-04-012022-09-3000007163142023-01-01srt:MaximumMember2022-09-300000716314us-gaap:PensionPlansDefinedBenefitMember2021-07-012021-09-3000007163142022-04-012022-06-300000716314ghm:FiveYearTermLoanWithBankOfAmericaMember2021-06-010000716314ghm:AllOtherCountriesMember2022-07-012022-09-300000716314ghm:OtherCommercialMember2021-04-012021-09-300000716314ghm:EmployeeStockPurchasePlanMember2022-04-012022-09-300000716314ghm:TwoThousandIncentivePlanMemberus-gaap:EmployeeStockOptionMember2021-04-012021-09-300000716314country:US2021-04-012021-09-300000716314ghm:OtherCommercialMember2022-07-012022-09-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000716314us-gaap:TreasuryStockMember2022-06-300000716314us-gaap:RetainedEarningsMember2021-06-3000007163142022-01-01srt:MinimumMember2022-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMemberghm:PerformanceVestedRestrictedStockMember2022-07-012022-09-300000716314us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-07-012021-09-300000716314ghm:BloombergShortTermBankYieldIndexMemberus-gaap:LineOfCreditMember2021-06-012021-06-010000716314ghm:EmployeeStockPurchasePlanMember2021-07-012021-09-300000716314us-gaap:RetainedEarningsMember2022-06-300000716314us-gaap:CustomerRelationshipsMemberghm:BarberNicholsIncMember2022-04-012022-09-300000716314ghm:BankOfAmericaTermLoanMember2022-09-300000716314us-gaap:PensionPlansDefinedBenefitMember2021-04-012021-09-300000716314ghm:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialLossesMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-04-012022-09-300000716314ghm:BarberNicholsIncMemberus-gaap:LeaseAgreementsMember2021-06-010000716314ghm:RefiningMember2022-07-012022-09-300000716314ghm:CustomerDepositsMember2022-03-310000716314us-gaap:LineOfCreditMember2021-06-010000716314us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300000716314srt:MaximumMemberghm:TwoThousandIncentivePlanMemberus-gaap:StockCompensationPlanMember2022-09-300000716314us-gaap:LatestTaxYearMemberus-gaap:StateAndLocalJurisdictionMember2022-04-012022-09-300000716314ghm:BarberNicholsIncMember2021-06-300000716314ghm:EmployeeStockPurchasePlanMember2022-06-300000716314ghm:SpaceMember2021-04-012021-09-300000716314ghm:LetterOfCreditSecuredByCashMember2021-06-012021-06-010000716314us-gaap:AccumulatedTranslationAdjustmentMember2021-04-012021-09-300000716314us-gaap:RetainedEarningsMember2022-07-012022-09-300000716314ghm:TwoThousandIncentivePlanMemberus-gaap:EmployeeStockOptionMember2021-07-012021-09-300000716314ghm:BarberNicholsIncMember2021-07-012021-09-300000716314us-gaap:CommonStockMember2021-07-012021-09-300000716314ghm:BankOfAmericaMember2022-09-300000716314ghm:TechnologyAndTechnicalKnowHowMemberghm:BarberNicholsIncMember2022-09-300000716314us-gaap:AdditionalPaidInCapitalMember2022-09-300000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-09-3000007163142021-06-300000716314us-gaap:CustomerRelationshipsMember2022-03-3100007163142022-07-012022-09-300000716314ghm:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialLossesMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-04-012021-09-300000716314us-gaap:CustomerRelationshipsMemberghm:BarberNicholsIncMember2022-09-300000716314us-gaap:CommonStockMember2022-04-012022-06-300000716314us-gaap:CommonStockMember2021-03-310000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMemberghm:PerformanceVestedRestrictedStockMembersrt:ScenarioForecastMembersrt:OfficerMember2022-04-012023-03-310000716314us-gaap:CommonStockMember2022-03-310000716314ghm:BarberNicholsIncMember2022-04-012022-09-300000716314us-gaap:TreasuryStockMember2022-09-300000716314us-gaap:CommonStockMember2022-06-3000007163142024-01-012022-09-300000716314us-gaap:AdditionalPaidInCapitalMember2022-06-300000716314ghm:SpaceMember2022-07-012022-09-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000716314ghm:AllOtherCountriesMember2021-07-012021-09-300000716314us-gaap:CustomerRelationshipsMember2022-09-300000716314srt:OfficerMember2022-04-012022-09-300000716314us-gaap:CommonStockMember2022-09-300000716314us-gaap:RetainedEarningsMember2021-07-012021-09-300000716314us-gaap:LetterOfCreditMember2021-06-012021-06-010000716314us-gaap:RetainedEarningsMember2021-03-310000716314us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000716314ghm:TechnologyAndTechnicalKnowHowMember2022-09-300000716314ghm:FloorRateMemberus-gaap:LineOfCreditMember2021-06-012021-06-010000716314us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-07-012021-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMemberghm:PerformanceVestedRestrictedStockMembersrt:OfficerMember2021-07-012021-09-300000716314us-gaap:TreasuryStockMember2021-07-012021-09-300000716314ghm:EmployeeStockPurchasePlanMember2021-04-012021-09-300000716314us-gaap:LineOfCreditMember2022-03-310000716314us-gaap:DomesticCountryMemberus-gaap:EarliestTaxYearMember2022-04-012022-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMemberghm:OfficersAndKeyEmployeesMemberghm:TimeVestedRestrictedStockMember2022-04-012022-09-300000716314ghm:BloombergShortTermBankYieldIndexMemberghm:FiveYearTermLoanWithBankOfAmericaMember2021-06-012021-06-010000716314us-gaap:ForeignCountryMemberus-gaap:LatestTaxYearMemberus-gaap:StateAdministrationOfTaxationChinaMember2022-04-012022-09-300000716314us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-3000007163142022-11-010000716314srt:MaximumMember2022-04-012022-09-300000716314country:CA2022-07-012022-09-3000007163142021-04-012021-09-300000716314country:CA2021-07-012021-09-300000716314us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-04-012022-09-300000716314ghm:FloorRateMemberghm:FiveYearTermLoanWithBankOfAmericaMember2021-06-012021-06-010000716314ghm:BankOfAmericaMember2022-04-012022-09-300000716314ghm:DefenseMember2022-04-012022-09-300000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-09-300000716314ghm:EmployeeStockPurchasePlanMember2022-07-012022-09-300000716314us-gaap:RetainedEarningsMember2022-03-310000716314us-gaap:TreasuryStockMember2022-04-012022-06-300000716314us-gaap:MiddleEastMember2021-04-012021-09-300000716314country:US2022-07-012022-09-300000716314us-gaap:MiddleEastMember2022-04-012022-09-300000716314us-gaap:CommonStockMember2021-06-300000716314ghm:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialGainLossesMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-3000007163142022-01-01srt:MaximumMember2022-09-300000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-04-012021-09-300000716314us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300000716314us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-04-012021-09-3000007163142021-04-012021-06-300000716314us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-09-300000716314us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-07-012022-09-3000007163142022-06-300000716314ghm:CustomerDepositsMember2022-09-300000716314ghm:BankOfAmericaTermLoanMember2022-03-310000716314us-gaap:RestrictedStockMemberghm:OfficersAndKeyEmployeesMemberghm:TwoThousandIncentivePlanMemberghm:PerformanceVestedRestrictedStockMember2022-04-012022-06-300000716314srt:SouthAmericaMember2022-07-012022-09-300000716314us-gaap:AccumulatedTranslationAdjustmentMember2022-04-012022-09-300000716314ghm:BarberNicholsIncMember2021-06-012021-06-010000716314ghm:TwoThousandIncentivePlanMemberus-gaap:EmployeeStockOptionMember2022-07-012022-09-300000716314us-gaap:LetterOfCreditMemberghm:HSBCBankUSAMember2021-06-010000716314us-gaap:LineOfCreditMember2022-07-012022-09-300000716314ghm:FiveYearTermLoanWithBankOfAmericaMember2021-06-012021-06-010000716314ghm:TechnologyAndTechnicalKnowHowMember2022-03-3100007163142022-04-012022-09-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000716314country:CA2022-04-012022-09-300000716314us-gaap:StockCompensationPlanMember2021-07-012021-09-300000716314ghm:BarberNicholsIncMemberus-gaap:TradeNamesMember2022-09-300000716314us-gaap:LetterOfCreditMember2022-03-310000716314us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-04-012022-09-3000007163142021-07-012021-09-300000716314srt:ScenarioForecastMember2022-04-012023-03-310000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMembersrt:DirectorMemberghm:TimeVestedRestrictedStockMember2022-04-012022-09-3000007163142023-01-01srt:MinimumMember2022-09-300000716314us-gaap:LetterOfCreditMember2022-09-300000716314srt:MaximumMember2022-01-012022-12-310000716314us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-07-012022-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMemberghm:PerformanceVestedRestrictedStockMember2022-04-012022-09-300000716314us-gaap:RetainedEarningsMember2022-09-300000716314us-gaap:StockCompensationPlanMember2022-07-012022-09-300000716314ghm:HSBCBankUSAMember2022-09-300000716314ghm:ChemicalPetrochemicalMember2021-07-012021-09-300000716314us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMembersrt:MinimumMember2021-06-012021-06-010000716314ghm:TwoThousandIncentivePlanMemberghm:StockCompensationPriorPlanMember2022-03-310000716314us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMember2021-06-012021-06-010000716314srt:MinimumMember2022-01-012022-12-310000716314us-gaap:AccumulatedTranslationAdjustmentMember2021-09-3000007163142021-09-300000716314us-gaap:RetainedEarningsMember2021-04-012021-06-300000716314ghm:BarberNicholsIncMember2021-06-010000716314ghm:TechnologyAndTechnicalKnowHowMemberghm:BarberNicholsIncMember2021-06-010000716314us-gaap:CommonStockMember2022-07-012022-09-300000716314srt:AsiaMember2022-07-012022-09-300000716314ghm:TwoThousandIncentivePlanMember2021-07-012021-09-300000716314us-gaap:ForeignCountryMemberus-gaap:LatestTaxYearMemberus-gaap:MinistryOfFinanceIndiaMember2022-04-012022-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMemberghm:TimeVestedRestrictedStockMembersrt:OfficerMember2022-04-012022-09-300000716314us-gaap:CustomerRelationshipsMemberghm:BarberNicholsIncMember2021-06-010000716314us-gaap:AdditionalPaidInCapitalMember2021-03-310000716314us-gaap:TreasuryStockMember2021-09-300000716314us-gaap:EarliestTaxYearMemberus-gaap:StateAndLocalJurisdictionMember2022-04-012022-09-300000716314us-gaap:TreasuryStockMember2022-07-012022-09-300000716314us-gaap:ForeignCountryMemberus-gaap:EarliestTaxYearMemberus-gaap:MinistryOfFinanceIndiaMember2022-04-012022-09-300000716314ghm:TwoThousandIncentivePlanMemberus-gaap:EmployeeStockOptionMember2020-08-112020-08-110000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-03-310000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMember2021-04-012021-09-300000716314srt:SouthAmericaMember2021-07-012021-09-300000716314srt:SouthAmericaMember2021-04-012021-09-300000716314srt:AsiaMember2021-04-012021-09-300000716314us-gaap:RetainedEarningsMember2021-09-300000716314ghm:RefiningMember2022-04-012022-09-300000716314us-gaap:RetainedEarningsMember2022-04-012022-06-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMembersrt:DirectorMemberghm:PerformanceVestedRestrictedStockMember2022-04-012022-06-300000716314ghm:DefenseMember2022-07-012022-09-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000716314us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMembersrt:MaximumMember2021-06-012021-06-010000716314us-gaap:AdditionalPaidInCapitalMember2022-03-310000716314us-gaap:TreasuryStockMember2021-06-300000716314ghm:OtherCommercialMember2022-04-012022-09-300000716314us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-04-012021-09-300000716314us-gaap:OtherOperatingIncomeExpenseMemberghm:BarberNicholsIncMember2021-09-300000716314us-gaap:TreasuryStockMember2022-03-310000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000716314us-gaap:ForeignCountryMemberus-gaap:StateAdministrationOfTaxationChinaMemberus-gaap:EarliestTaxYearMember2022-04-012022-09-300000716314ghm:BarberNicholsIncMember2021-04-012021-09-3000007163142022-03-310000716314ghm:ChemicalPetrochemicalMember2022-07-012022-09-300000716314srt:AsiaMember2022-04-012022-09-300000716314ghm:RefiningMember2021-07-012021-09-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000716314country:US2022-04-012022-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMember2020-08-110000716314us-gaap:MiddleEastMember2022-07-012022-09-300000716314ghm:AllOtherCountriesMember2022-04-012022-09-300000716314ghm:DefenseMember2021-04-012021-09-300000716314us-gaap:PensionPlansDefinedBenefitMember2022-04-012022-09-3000007163142022-09-300000716314ghm:BarberNicholsIncMemberghm:BacklogMember2022-09-300000716314ghm:ChemicalPetrochemicalMember2022-04-012022-09-300000716314ghm:SpaceMember2022-04-012022-09-300000716314ghm:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialGainLossesMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000716314ghm:TwoThousandIncentivePlanMemberus-gaap:EmployeeStockOptionMember2022-04-012022-09-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000716314ghm:TechnologyAndTechnicalKnowHowMemberghm:BarberNicholsIncMember2022-04-012022-09-300000716314us-gaap:AdditionalPaidInCapitalMember2021-06-300000716314us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000716314us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-04-012022-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMembersrt:DirectorMemberghm:TimeVestedRestrictedStockMember2022-04-012022-06-300000716314ghm:RefiningMember2021-04-012021-09-300000716314ghm:BarberNicholsIncMembersrt:MaximumMember2021-06-010000716314us-gaap:StockCompensationPlanMember2021-04-012021-09-300000716314us-gaap:RestrictedStockMemberghm:TwoThousandIncentivePlanMemberghm:PerformanceVestedRestrictedStockMembersrt:OfficerMember2022-04-012022-09-300000716314us-gaap:DomesticCountryMemberus-gaap:LatestTaxYearMember2022-04-012022-09-300000716314ghm:ChemicalPetrochemicalMember2021-04-012021-09-300000716314srt:AsiaMember2021-07-012021-09-30iso4217: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 September 30, 2022

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 November 1, 2022, there were outstanding 10,611,061 shares of the registrant’s common stock, par value $0.10 per share.

 

 


Graham Corporation and Subsidiaries

Index to Form 10-Q

As of September 30, 2022 and March 31, 2022 and for the three and six months ended September 30, 2022 and 2021

 

 

 

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

21

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

 

 

 

Item 4.

Controls and Procedures

31

 

 

 

Part II.

OTHER INFORMATION

 

 

 

 

Item 1A.

Risk Factors

32

 

 

 

Item 6.

Exhibits

33

 

 

 

Signatures

34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2


GRAHAM CORPORATION AND SUBSIDIARIES

FORM 10-Q

SEPTEMBER 30, 2022

PART I – FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

(Amounts in thousands, except per share data)

 

 

(Amounts in thousands, except per share data)

 

 

Net sales

 

$

38,143

 

 

$

34,146

 

 

$

74,218

 

 

$

54,303

 

 

Cost of products sold

 

 

32,863

 

 

 

30,703

 

 

 

62,194

 

 

 

49,946

 

 

Gross profit

 

 

5,280

 

 

 

3,443

 

 

 

12,024

 

 

 

4,357

 

 

Other expenses and income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

5,059

 

 

 

4,973

 

 

 

10,544

 

 

 

9,805

 

 

Selling, general and administrative – amortization

 

 

273

 

 

 

274

 

 

 

547

 

 

 

365

 

 

Other operating income, net

 

 

 

 

 

(1,102

)

 

 

 

 

 

(1,102

)

 

Operating income (loss)

 

 

(52

)

 

 

(702

)

 

 

933

 

 

 

(4,711

)

 

Other income, net

 

 

(62

)

 

 

(145

)

 

 

(125

)

 

 

(305

)

 

Interest income

 

 

(24

)

 

 

(14

)

 

 

(32

)

 

 

(31

)

 

Interest expense

 

 

270

 

 

 

129

 

 

 

435

 

 

 

168

 

 

Income (loss) before provision (benefit) for income taxes

 

 

(236

)

 

 

(672

)

 

 

655

 

 

 

(4,543

)

 

Provision (benefit) for income taxes

 

 

(40

)

 

 

(180

)

 

 

175

 

 

 

(925

)

 

Net income (loss)

 

$

(196

)

 

$

(492

)

 

$

480

 

 

$

(3,618

)

 

Per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(0.02

)

 

$

(0.05

)

 

$

0.05

 

 

$

(0.35

)

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(0.02

)

 

$

(0.05

)

 

$

0.05

 

 

$

(0.35

)

 

Weighted average common shares
  outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

10,617

 

 

 

10,681

 

 

 

10,614

 

 

 

10,442

 

 

Diluted

 

 

10,617

 

 

 

10,681

 

 

 

10,618

 

 

 

10,442

 

 

Dividends declared per share

 

$

 

 

$

0.11

 

 

$

 

 

$

0.22

 

 

 

See Notes to Condensed Consolidated Financial Statements.

3


GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

 

 

Net income (loss)

 

$

(196

)

 

$

(492

)

 

$

480

 

 

$

(3,618

)

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(337

)

 

 

(35

)

 

 

(680

)

 

 

93

 

 

Defined benefit pension and other postretirement plans net
 of income tax expense of $
37 and $72 for the three months
 ended September 30, 2022 and 2021, respectively, and $
74 and $121 for the six months ended September 30, 2022 and 2021, respectively

 

 

131

 

 

 

251

 

 

 

262

 

 

 

421

 

 

Total other comprehensive (loss) income

 

 

(206

)

 

 

216

 

 

 

(418

)

 

 

514

 

 

Total comprehensive income (loss)

 

$

(402

)

 

$

(276

)

 

$

62

 

 

$

(3,104

)

 

 

See Notes to Condensed Consolidated Financial Statements.

 

4


GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

September 30, 2022

 

 

March 31, 2022

 

 

 

 

(Amounts in thousands, except per share data)

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

14,122

 

 

$

14,741

 

 

Trade accounts receivable, net of allowances ($84 and $87 at September 30 and
   March 31, 2022, respectively)

 

 

27,109

 

 

 

27,645

 

 

Unbilled revenue

 

 

30,670

 

 

 

25,570

 

 

Inventories

 

 

19,848

 

 

 

17,414

 

 

Prepaid expenses and other current assets

 

 

2,235

 

 

 

1,391

 

 

Income taxes receivable

 

 

570

 

 

 

459

 

 

      Total current assets

 

 

94,554

 

 

 

87,220

 

 

Property, plant and equipment, net

 

 

24,354

 

 

 

24,884

 

 

Prepaid pension asset

 

 

7,384

 

 

 

7,058

 

 

Operating lease assets

 

 

7,887

 

 

 

8,394

 

 

Goodwill

 

 

23,523

 

 

 

23,523

 

 

Customer relationships, net

 

 

11,013

 

 

 

11,308

 

 

Technology and technical know-how, net

 

 

9,427

 

 

 

9,679

 

 

Other intangible assets, net

 

 

8,300

 

 

 

8,990

 

 

Deferred income tax asset

 

 

2,288

 

 

 

2,441

 

 

Other assets

 

 

175

 

 

 

194

 

 

Total assets

 

$

188,905

 

 

$

183,691

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Short-term debt obligations

 

$

2,500

 

 

$

 

 

Current portion of long-term debt

 

 

2,000

 

 

 

2,000

 

 

Current portion of finance lease obligations

 

 

23

 

 

 

23

 

 

Accounts payable

 

 

20,149

 

 

 

16,662

 

 

Accrued compensation

 

 

9,745

 

 

 

7,991

 

 

Accrued expenses and other current liabilities

 

 

4,781

 

 

 

6,047

 

 

Customer deposits

 

 

26,079

 

 

 

25,644

 

 

Operating lease liabilities

 

 

972

 

 

 

1,057

 

 

Income taxes payable

 

 

8

 

 

 

 

 

Total current liabilities

 

 

66,257

 

 

 

59,424

 

 

Long-term debt

 

 

14,625

 

 

 

16,378

 

 

Finance lease obligations

 

 

 

 

 

11

 

 

Operating lease liabilities

 

 

7,103

 

 

 

7,460

 

 

Deferred income tax liability

 

 

104

 

 

 

62

 

 

Accrued pension and postretirement benefit liabilities

 

 

1,663

 

 

 

1,666

 

 

Other long-term liabilities

 

 

2,187

 

 

 

2,196

 

 

Total liabilities

 

 

91,939

 

 

 

87,197

 

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock, $1.00 par value, 500 shares authorized

 

 

 

 

 

 

 

Common stock, $0.10 par value, 25,500 shares authorized, 10,758 and 10,801 shares
     issued and
10,611 and 10,636 shares outstanding at September 30 and March 31, 2022,
     respectively

 

 

1,076

 

 

 

1,080

 

 

Capital in excess of par value

 

 

27,849

 

 

 

27,770

 

 

Retained earnings

 

 

77,556

 

 

 

77,076

 

 

Accumulated other comprehensive loss

 

 

(6,889

)

 

 

(6,471

)

 

Treasury stock (147 and 164 shares at September 30 and March 31, 2022, respectively)

 

 

(2,626

)

 

 

(2,961

)

 

Total stockholders’ equity

 

 

96,966

 

 

 

96,494

 

 

Total liabilities and stockholders’ equity

 

$

188,905

 

 

$

183,691

 

 

See Notes to Condensed Consolidated Financial Statements.

5


GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Six Months Ended

 

 

 

September 30,

 

 

 

2022

 

 

2021

 

Operating activities:

 

(Dollar amounts in thousands)

 

Net income (loss)

 

$

480

 

 

$

(3,618

)

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

 

 

 

 

 

 

Depreciation

 

 

1,724

 

 

 

1,399

 

Amortization

 

 

1,238

 

 

 

1,009

 

Amortization of actuarial losses

 

 

336

 

 

 

455

 

Amortization of debt issuance costs

 

 

93

 

 

 

 

Equity-based compensation expense

 

 

312

 

 

 

330

 

Gain on disposal or sale of property, plant and equipment

 

 

 

 

 

13

 

Change in fair value of contingent consideration

 

 

 

 

 

(1,900

)

Deferred income taxes

 

 

174

 

 

 

693

 

(Increase) decrease in operating assets:

 

 

 

 

 

 

Accounts receivable

 

 

38

 

 

 

(2,289

)

Unbilled revenue

 

 

(5,283

)

 

 

(1,944

)

Inventories

 

 

(2,560

)

 

 

3,278

 

Prepaid expenses and other current and non-current assets

 

 

(782

)

 

 

(1,233

)

Income taxes receivable

 

 

(136

)

 

 

(2,894

)

Operating lease assets

 

 

901

 

 

 

432

 

Prepaid pension asset

 

 

(325

)

 

 

(603

)

Increase (decrease) in operating liabilities:

 

 

 

 

 

 

Accounts payable

 

 

3,730

 

 

 

(4,477

)

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

 

 

553

 

 

 

779

 

Customer deposits

 

 

544

 

 

 

1,835

 

Operating lease liabilities

 

 

(840

)

 

 

(387

)

Long-term portion of accrued compensation, accrued pension liability
   and accrued postretirement benefits

 

 

(595

)

 

 

420

 

Net cash used by operating activities

 

 

(398

)

 

 

(8,702

)

Investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(1,176

)

 

 

(1,227

)

Redemption of investments at maturity

 

 

 

 

 

5,500

 

Acquisition of Barber-Nichols, LLC

 

 

 

 

 

(59,563

)

Net cash used by investing activities

 

 

(1,176

)

 

 

(55,290

)

Financing activities:

 

 

 

 

 

 

Borrowings of short-term debt obligations

 

 

5,000

 

 

 

4,000

 

Principal repayments on debt

 

 

(3,511

)

 

 

(510

)

Proceeds from the issuance of debt

 

 

 

 

 

20,000

 

Repayments on lease financing obligations

 

 

(136

)

 

 

(91

)

Payment of debt issuance costs

 

 

(122

)

 

 

(150

)

Dividends paid

 

 

 

 

 

(2,353

)

Purchase of treasury stock

 

 

(22

)

 

 

(41

)

Net cash provided by financing activities

 

 

1,209

 

 

 

20,855

 

Effect of exchange rate changes on cash

 

 

(254

)

 

 

68

 

Net decrease in cash and cash equivalents

 

 

(619

)

 

 

(43,069

)

Cash and cash equivalents at beginning of period

 

 

14,741

 

 

 

59,532

 

Cash and cash equivalents at end of period

 

$

14,122

 

 

$

16,463

 

 

See Notes to Condensed Consolidated Financial Statements.

 

6


GRAHAM CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 

(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, 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

 

Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

(196

)

 

 

(206

)

 

 

 

 

 

(402

)

Issuance of shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of shares

 

 

(11

)

 

 

(1

)

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Recognition of equity-based
  compensation expense

 

 

 

 

 

 

 

 

198

 

 

 

 

 

 

 

 

 

 

 

 

198

 

Issuance of treasury stock

 

 

 

 

 

 

 

 

(237

)

 

 

 

 

 

 

 

 

356

 

 

 

119

 

Balance at September 30, 2022

 

 

10,758

 

 

$

1,076

 

 

$

27,849

 

 

$

77,556

 

 

$

(6,889

)

 

$

(2,626

)

 

$

96,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2021

 

 

10,748

 

 

$

1,075

 

 

$

27,272

 

 

$

89,372

 

 

$

(7,397

)

 

$

(12,393

)

 

$

97,929

 

Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

(3,126

)

 

 

298

 

 

 

 

 

 

(2,828

)

Issuance of shares

 

 

135

 

 

 

13

 

 

 

(13

)

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of shares

 

 

(9

)

 

 

(1

)

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

(1,177

)

 

 

 

 

 

 

 

 

(1,177

)

Recognition of equity-based
  compensation expense

 

 

 

 

 

 

 

 

353

 

 

 

 

 

 

 

 

 

 

 

 

353

 

Issuance of treasury stock

 

 

 

 

 

 

 

 

(194

)

 

 

 

 

 

 

 

 

9,158

 

 

 

8,964

 

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41

)

 

 

(41

)

Balance at June 30, 2021

 

 

10,874

 

 

 

1,087

 

 

 

27,419

 

 

 

85,069

 

 

 

(7,099

)

 

 

(3,276

)

 

 

103,200

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(492

)

 

 

216

 

 

 

 

 

 

(276

)

Issuance of shares

 

 

27

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of shares

 

 

(91

)

 

 

(9

)

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

(1,177

)

 

 

 

 

 

 

 

 

(1,177

)

Recognition of equity-based
  compensation expense

 

 

 

 

 

 

 

 

(23

)

 

 

 

 

 

 

 

 

 

 

 

(23

)

Issuance of treasury stock

 

 

 

 

 

 

 

 

(63

)

 

 

 

 

 

 

 

 

191

 

 

 

128

 

Balance at September 30, 2021

 

 

10,810

 

 

$

1,081

 

 

$

27,339

 

 

$

83,400

 

 

$

(6,883

)

 

$

(3,085

)

 

$

101,852

 

 

 

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 Suzhou, China and Ahmedabad, India at September 30 and March 31, 2022, and its recently acquired wholly-owned subsidiary, Barber-Nichols, LLC ("BN"), located in Arvada, Colorado at September 30, 2022 and for the period June 1, 2021 through March 31, 2022 (See Note 2). 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, 2022 presented herein was derived from the Company’s audited Consolidated Balance Sheet as of March 31, 2022. 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, 2022 ("fiscal 2022"). 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 and six months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the current fiscal year, which ends March 31, 2023 ("fiscal 2023").

 

NOTE 2 – ACQUISITION:

On June 1, 2021, the Company acquired BN, a designer and manufacturer of turbomachinery products located in Arvada, Colorado that serves the defense and aerospace industry as well as the energy and cryogenic markets. The Company believes this acquisition furthers its growth strategy through market and product diversification, broadens its offerings and strengthens its presence in the defense industry, builds on its presence in the energy markets and adds capabilities in the space industry.

This transaction was accounted for as a business combination which requires that assets acquired and liabilities assumed be recognized at their fair value as of the acquisition date. The purchase price of $72,014 was comprised of 610 shares of the Company's common stock, representing a value of $8,964 at a price of $14.69 per share, and cash consideration of $61,150, subject to certain potential adjustments, including a customary working capital adjustment. The cash consideration was funded through cash on-hand and debt proceeds. The purchase agreement included a contingent earn-out dependent upon certain financial measures of BN post-acquisition, in which the sellers were eligible to receive up to $14,000 in additional cash consideration. At June 30, 2021, a liability of $1,900 was recorded for the contingent earn-out. Subsequent to the acquisition, the earn out agreement was terminated and the contingent liability was reversed into Other operating income, net, on the Company’s Condensed Consolidated Statement of Operations. Prior to the acquisition, BN and Ascent Properties Group, LLC, a related party, entered into a nine year operating lease agreement for an office and manufacturing building in Arvada, Colorado. This lease was acquired as part of the Company's acquisition of BN and has a monthly payment in the amount of $40 with a 3% yearly escalation. Also prior to the acquisition, BN and Ascent Properties Group, LLC entered into a seven-year equipment lease agreement to lease various machinery and equipment. This equipment lease was also acquired as part of the Company's acquisition of BN and has a monthly payment of $16. Acquisition related costs of $93 and $262 were expensed in the three and six month periods ending September 30, 2021, and are included in selling, general and administrative expenses in the Condensed Consolidated Statement of Operations.

The cost of the acquisition was allocated to the assets acquired and liabilities assumed based upon its estimated fair value at the date of the acquisition. The following table summarizes the final purchase price allocation, after adjustments were recorded in the measurement period, of the assets acquired and liabilities assumed: