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GHM NYSE· Graham Corporation
Earnings report Q4 2023

GHM Reports Strong Revenue Growth in Q3 Fiscal 2024

Segments of revenue

GHM's net sales for the third quarter of fiscal 2024 reached $43.8 million, representing a 10% increase compared to the same period in fiscal 2023. The growth was primarily driven by sales to the defense industry, which saw a $2.6 million increase due to an improved mix of higher margin defense projects, increased direct labor, better execution, timing of material receipts, and improved pricing. Additionally, commercial aftermarket sales contributed approximately $3 million to the quarter's net sales.

Strengths

GHM demonstrated strong revenue growth in the latest quarter, driven by increased sales to the defense industry and continued growth in commercial aftermarket sales. The company's gross profit margin also improved, reaching 22% in Q3 fiscal 2024 compared to 16% in the same quarter of the previous fiscal year. This improvement can be attributed to an enhanced mix of sales related to higher margin defense and commercial aftermarket, as well as better execution and pricing on defense contracts.

Challenges

One challenge GHM faced in the latest quarter was higher incentive compensation compared to the prior year, which partially offset the increase in gross profit. This indicates the need for careful management of compensation expenses to maintain profitability.

Noteworthy

GHM's organic growth, excluding the impact of P3, was 7% over the prior year. The company's revenue was also boosted by $1.0 million from P3, primarily related to the space industry. These factors highlight GHM's ability to generate growth both organically and through strategic acquisitions.

Summary

GHM delivered a strong performance in the latest quarter, with net sales increasing by 10% compared to the same period in the previous fiscal year. The growth was driven by sales to the defense industry and continued expansion in commercial aftermarket sales. The company's improved gross profit margin and successful execution of higher margin defense projects contributed to its overall strength. However, GHM faced the challenge of higher incentive compensation, which impacted its gross profit. Overall, GHM's revenue growth and improved profitability position the company well for future success.

Source documents

Form 10-Q  filed on Feb 05, 2024
114 pages scanned

Reference data

Company financials Q4 revenue 43.8M
Analyst estimates Q4 EPS missed by NaN%
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