Graham Corporation reported third‑quarter fiscal 2026 results that surpassed expectations, with revenue rising to $56.7 million, a 21% year‑over‑year increase, and adjusted earnings per share of $0.31, beating consensus estimates of $0.17 by $0.14 or 82%. Adjusted EBITDA for the quarter was $6.0 million, up 50% from $4.0 million in the same period a year earlier, reflecting stronger demand and disciplined cost management. Gross profit reached $13.5 million, and the gross margin contracted to 23.8% from 24.8% in Q3 FY2025, largely due to a higher mix of lower‑margin material receipts.
Defense and Energy & Process segments continued to drive growth. Defense sales increased to $40.8 million, supported by submarine and torpedo programs, while Energy & Process sales grew to $21.3 million. The company’s focus on mission‑critical defense technology is reflected in a record backlog of $515.6 million, 85% of which is defense‑related, providing strong visibility into future revenue streams.
SG&A expenses were $10.6 million, representing 18.6% of sales, a 200‑basis‑point decline from the prior year. The company’s disciplined cost control helped offset the margin contraction, and the adjusted EBITDA margin improved to 10.7% from 9.5% in the prior year, indicating better operating leverage as sales volume expanded.
Management raised fiscal 2026 net sales guidance to $233 million–$239 million and maintained adjusted EBITDA guidance of $24 million–$28 million, signaling confidence in continued demand and the ability to convert the backlog into revenue. The guidance increase reflects the company’s view that defense demand will remain robust and that operational efficiencies will continue to support profitability.
President and CEO Matthew J. Malone said, "Our third‑quarter results reflect continued strong, disciplined execution across the organization as we progress through the back half of fiscal 2026. Revenue growth and profitability were driven by solid performance across our end markets and supported by a record backlog, which provides meaningful visibility into future demand. Activity in our Defense market remains robust, while the Energy & Process and Space markets continue to perform in line with our expectations."
The results underscore Graham’s strategic pivot toward defense technology, with margin expansion driven by cost discipline and higher‑margin product mix. While gross margins contracted slightly, the company’s adjusted EBITDA margin improvement and strong backlog position it well for the remainder of the fiscal year. Management’s focus on automation, advanced testing, and new technical capabilities signals a continued commitment to operational efficiency and margin growth in FY27.
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.