Graham Corporation

Greetings and welcome to the Graham Corporation fourth quarter 2023 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Graham Corporation. Thank you. You may begin.

Thank you, Christine. And good morning, everyone. We certainly appreciate your time today and your interest in Graham Corporation. Here with me on the call are Dan Thorne, our President and CEO, and Chris Thome, our Chief Financial Officer. You should have a copy of the fourth quarter fiscal 23 financial results, which we released earlier this morning. And if not, you can access the release on our website at ir.gramcorp.com. You will also find on our website the slides that will accompany our conversation today. Dan and Chris are going to provide their formal remarks, after which we open the line for questions. But if you will turn to slide two in the deck, I'll review the Safe Harbor Statement. You should be aware that we may make some forward-looking statements during the formal discussion as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release as well as with other documents filed by the company with Securities and Exchange Commission. You can find those documents on our website or at sec.gov. During today's call, we will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or the substitute for results prepared in accordance with GAAP. We have provided reconciliation of non-GAAP measures with comparable GAAP measures in the tables that accompany today's releases and slides. We also use key performance indicators to help gauge the progress and performance of the company. These key performance metrics are orders, backlog, and book-to-bill. They are operational measures, and the company's methodology for calculating these numbers does not meet the definition of a non-gap measure, as that term is defined by the SEC. So a quantitative reconciliation of each of these is not required or provided. But you can find the disclaimer regarding our use of key performance metrics at the back of our deck in the supplemental slides. So with that, please advance to slide three, and I'll turn the call over to Dan to begin.

Thank you, Debbie. Good morning, everyone. We made excellent progress with our strategy in fiscal 2023. We stabilized our vacuum and heat transfer technology business in Batavia, expanded our turbo machinery operations in Denver, and further diversified our revenue with more defense, space, and new energy business. We had record revenue of $157 million for the year, a 28% increase over the prior year. This included about $8.9 million of acquired revenue. Importantly, our revenue growth reflected the success we have had with diversifying our markets. Defense was 42% of total revenue, and our refining and petrochem markets combined were 31% of revenue. Space grew to 13% of revenue for the year, and our other market category, driven by new energy, was 14% of sales. We are excited about the many opportunities we see in new energy. The hydrogen market is developing quickly, and we provide both thermal machinery, and heat transfer equipment for these applications. Another interesting market is lithium extraction from geothermal brine. We have historically provided surface condensers for geothermal power plants, but the added value of lithium extraction to the process is driving more investment into geothermal projects. We ended the year on a strong note with orders of $50.8 million in the fourth quarter and a record $202.7 million of orders for the year. Fourth quarter orders included the $23 million follow-on to provide power hardware for the Mark 48 torpedo. Booked a bill for the quarter and the year was quite healthy at 1.2 and 1.3x respectively. We continue to strengthen our operations, improve productivity, and deliver better gross margins. A better mix of business also helped. Gross margin was 16.2% for the year compared to just 7.4% last year due to the impact of cost and labor overruns on our US Navy programs. As we complete the remaining two first articles from orders received several years ago, and as we have more revenue from better price contracts, we expect margins to further expand. We aren't stopping there, though, as there is still much more work to be done to drive operational excellence, which I'll discuss after Chris presents our financials. One other topic I would like to address is related to a large space customer that filed for bankruptcy during the quarter. It was a disappointment, to say the least. This had a net impact of about $2.5 million on our results, or approximately 19 cents per diluted share. I was very pleased at the outcome for the year, as we were able to achieve our adjusted EBITDA guidance provided at the beginning of the year, despite this event, and it exceeded our raised revenue guidance. With that, let me turn it to Chris to go into greater detail on the results. Chris.