Graham Corporation (AMEX: GHM) today announced that it received a $1.8 million order for two surface condensers to be installed in a coal-to-liquid (CTL) facility located in China. The condensers will be manufactured in Graham's Batavia, New York facility with final shipment planned for the fourth quarter of fiscal year 2009, ending March 31, 2009.
CTL is an emerging technology used to liquefy coal and upgrade the resulting output into petroleum-based products. As worldwide oil reserves continue to decline, interest in CTL technology is growing as coal is believed to be one of the richest and widely distributed fossil deposits on earth. In this CTL facility, clean CTL technology will be used to convert coal to methanol which will then be further converted into ethylene. Ethylene is used in downstream facilities in the production of various plastic and chemical products, from tires and carpets to detergents and clothing.
Jim Lines, Graham's President and Chief Executive Officer, commented, "We believe there are an abundance of opportunities in production facilities that will rely on emerging technology, such as CTL, gas-to-liquid, biodiesel and ethanol plants. The end-users for these projects, regardless of location, require high-quality, reliable equipment, and the Graham brand provides the value that they want.
"Our early guidance for fiscal year 2009 revenue growth is in the 10% to 15% range, with higher probability of being at the upper end of the range. Our pipeline of potential projects continues to remain strong in both the domestic and international refinery and petrochemical markets while we see increasing opportunities in a broader variety of industries as evidenced by this win. We ended our third quarter with a record backlog of $63.0 million and have another quarter of new order opportunities which we intend to use to push the business beyond our current expectations, if possible. We believe that the steps we have taken to improve our productivity, expand capacity and selectively outsource projects will also allow us to achieve our projected profitability criteria and gross margins in the 35% or potentially greater range.
Mr. Lines concluded, "As I have mentioned in the past, growth in the refining and petrochemical markets is at an all-time high, resulting in unprecedented demand and prices for critical equipment and resources. We believe the forces driving this growth remain solid and will continue to fiscal 2010 and beyond. Naturally, other equipment suppliers will attempt to move into these markets. We are in a leadership position in these industries and intend to remain there in the future.
Graham announced on Monday of this week sales growth of 42.2% and diluted earnings per share growth of over 500% for the third quarter of fiscal 2008 which ended December 31, 2007 when compared to the same period in fiscal 2007. Sales were $20.6 million and net income was $3.8 million, or $0.74 per diluted share, representing an 18.4% net margin.
The Company expects full fiscal year 2008 revenue to be in the upper end of its previously announced expected range of $80 to $85 million, gross margin to be in the upper 30% range, SG&A to be approximately $13.3 to $13.5 million, interest income of $1.0 to $1.2 million and the effective tax rate to be about 34%.
ABOUT GRAHAM CORPORATION
With world-renowned engineering expertise in vacuum and heat transfer technology, Graham Corporation is a designer, manufacturer and global supplier of ejectors, pumps, condensers, vacuum systems and heat exchangers. Over the past 71 years, Graham has built a reputation for top quality, reliable products and high-standards of customer service. The principal markets for Graham's equipment, sold either as components or complete system solutions, are the petrochemical, oil refining and electric power generation industries, including cogeneration and geothermal plants. Graham equipment can also be found in diverse applications, such as metal refining, pulp and paper processing, ship-building, water heating, refrigeration, desalination, food processing, pharmaceuticals, heating, ventilating and air conditioning.
Graham's reach spans the globe. Its equipment is installed in facilities from North and South America to Europe, Asia, Africa and the Middle East. More information regarding Graham can be found at its website: www.graham-mfg.com
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in Graham's Annual and Quarterly Reports filed with the Securities and Exchange Commission, include Graham's ability to successfully execute the contract, that the estimated value of the production contract will be realized, customer preferences and changes in market conditions in the industries in which Graham operates and its ability to achieve its announced goals and objectives. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated.
