A maker of mission-critical fluid, power, heat transfer, vacuum, and advanced mixing technologies for the Defense, Energy & Process, and Space industries. Its equipment supports U.S. Navy aircraft carriers, Virginia and Columbia class submarines, and torpedo propulsion systems. Recent acquisitions added Xdot foil bearings and FlackTek's bladeless centrifugal mixers, which serve defense, aerospace, and battery markets.
Backlog hit a record $557.2M after $95.9M in Q1 orders, but gross margin fell 1.6 points to 25.0% as lower-margin defense work and FlackTek costs weighed.
Graham's reached a new high, but profitability slipped. rose 28.6% to $71.3M, driven by a 40% increase in defense sales and the FlackTek acquisition, while fell 21.4% to $0.33 as contracted on a mix shift toward lower-margin defense work and higher acquisition-related costs. The company's record order book now stands at $557.2M, but converting it at higher margins is the open question.
Key takeaways
Orders booked reached $95.9M, a 1.3x ratio, pushing to a record $557.2M with defense representing 84% of the total.
rose 28.6% to $71.3M, led by a 40% increase in defense sales to $41.4M and a $6.6M contribution from the newly acquired FlackTek.
fell 1.6 points to 25.0% as a higher mix of lower-margin defense sales and material receipts offset the growth.
Section summaries
Management's Discussion and Analysis
Q1 FY2027 revenue rose 29% to $71.3M on Defense strength and FlackTek acquisition; GAAP EPS fell to $0.33 but adjusted EPS grew 9% to $0.49.
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increased 29% to $71.3M, driven by a 40% jump in Defense sales to $41.4M and $6.6M from the newly acquired FlackTek.
declined 150 to 25.0% due to a higher mix of lower-margin Defense sales and material receipts.
fell 21.4% to $0.33, while rose 9% to $0.49, with the difference driven by $1.8M in incremental FlackTek costs and $0.6M in acquisition and integration expenses.
Cash used by operations was $12.7M, mainly from bonus payments and timing; a $50M post-quarter equity raise boosted cash to $27.0M and paid down $13M in debt.
Full-year fiscal 2027 was reiterated at of $285M-$295M and adjusted of $35M-$40M.
What changed
The decline to 25.0% from 26.5% a year ago confirms the mix pressure flagged in Q2 and Q3 FY2026, as the shift toward lower-margin defense material receipts persisted and no grant benefit was recorded this quarter.
grew to $557.2M from $532.6M at fiscal year-end, extending the record, but the defense share dipped slightly to 84% from 85% as FlackTek added non-defense orders.
The $50M equity raise and subsequent debt repayment, noted as a post-year event in the FY2026 10-K, was completed, leaving the company with $27.0M in cash and no at quarter-end.
SG&A rose to $13.1M, up 33% , as the $1.8M in incremental FlackTek costs and $0.6M in acquisition expenses more than offset the absence of the $1.1M BN Performance Bonus that had inflated prior-year costs.
What to watch
Q2 FY2027 against the 25.0% Q1 level to see if it returns to the 24.5%-25.5% guided range as the defense material mix normalizes and FlackTek integration progresses.
Next quarterly orders booked and U.S. Navy-linked share to confirm the $95.9M pace sustains beyond the Virginia Class and torpedo follow-ons that drove prior records.
conversion from the $557.2M total to confirm ~45% within-one-year recognition into FY2027 as guided.
Any change to the suspended now that the company is debt-free with $27.0M in cash and no stated bank restriction.
SG&A rose 33% to $13.1M, including $1.8M in incremental FlackTek costs and $0.6M in acquisition and integration expenses, partially offset by the absence of the $1.1M BN Performance Bonus.
Orders were $95.9M (book-to-bill of 1.3x), pushing to a record $557.2M, with Defense representing 84% of the total.
Cash used by operations was $12.7M, mainly from bonus payments and timing; a $50M equity raise boosted cash to $27.0M and paid down $13M in debt.
Full-year fiscal 2027 was reiterated, including of $285M-$295M and of $35M-$40M.
Quantitative and Qualitative Disclosures About Market Risk
Foreign currency, price competition, and interest rates are the principal market risks; no derivatives were held at quarter-end.
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International sales were 10% of total sales in Q1 FY2027, with substantially all foreign sales denominated in local currencies (USD, RMB, INR).
Currency fluctuations increased cash balances by $21, driven by USD weakening against RMB and strengthening against INR.
Foreign-currency purchases were only 2% of cost of products sold, and no forward currency contracts were used or held during the period.
Price risk arises from global competitors with lower production costs and tariffs; cost inflation in labor, materials, and supply chain may pressure margins.
No variable-rate debt or were outstanding as of June 30, 2026 under the with Wells Fargo.
There have been no material changes from the risk factors previously disclosed in Part 1 – Item 1A of the Company’s Form 10-K for the fiscal year ended March 31, 2026.
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There have been no material changes from the risk factors previously disclosed in Part 1 – Item 1A of the Company’s Form 10-K for the fiscal year ended March 31, 2026.