Graham Posts Record Annual Revenue as Backlog Swells to $533 Million
The industrial manufacturer's full-year revenue hit a record $245.3 million, topping its own raised guidance, even as fourth-quarter margins contracted sharply.
Graham Corp. (GHM), the industrial manufacturer of fluid, energy, and defense equipment, reported record full-year fiscal 2026 revenue of $245.3 million, a 17% increase from the prior year, as a surge in orders pushed its backlog to $532.6 million. The results, which exceeded the company's own mid-year guidance, were powered by strength in its Defense and Space segments and the initial contribution from its recent FlackTek acquisition.
The year's defining tension, however, lay between top-line growth and bottom-line pressure. While Graham's revenue set a record, fourth-quarter profitability contracted sharply. Gross margin for the quarter fell to 22.7% from 27.0% a year earlier, a 430-basis-point compression driven by a less favorable sales mix, including increased lower-margin Defense work and the impact of FlackTek purchase accounting. This margin erosion flowed through to the bottom line, with fourth-quarter operating income falling 52% to $2.7 million and net income declining 55% to $2.0 million, or $0.18 a share.
For the full year, adjusted earnings per share rose 13% to $1.40, and adjusted EBITDA increased 16% to $26.0 million, though the adjusted EBITDA margin held roughly flat at 10.6%. The fourth-quarter revenue figure of $67.1 million represented a 13% year-over-year increase, a deceleration from the 21% growth recorded in the third quarter, but still marked a quarterly record.
The company's forward momentum is anchored in a record order book. Graham secured $359.4 million in orders for the full year, yielding a book-to-bill ratio of 1.5x and ending the period with a backlog of $532.6 million, up 29% from a year earlier. The company noted that approximately 35% to 40% of that backlog is expected to convert to revenue within the next 12 months. A significant driver of this growth was the Space segment, where orders surged 76% year-over-year, signaling a revenue ramp anticipated in fiscal 2027 even as Space sales were roughly flat in the year just ended.
The acquisition of FlackTek, which closed in January 2026 for $35 million, contributed $2.8 million in fourth-quarter sales and established advanced mixing as Graham's third core technology platform. The deal, along with $15.8 million in capital expenditures, reduced Graham's cash position to $6.6 million from $21.6 million a year earlier. To bolster its balance sheet, the company subsequently received a $50 million investment from T. Rowe Price in the first quarter of fiscal 2027 and used $13 million for debt repayment.
Looking ahead, Graham issued fiscal 2027 guidance for revenue of $285 million to $295 million, representing growth of 16% to 20% over fiscal 2026. The company projects adjusted EBITDA of $35 million to $40 million, an increase of 35% to 54% from the year just ended, with gross margins expected to improve to a range of 24.5% to 25.5%.
The Energy & Process segment also contributed to the annual growth, with revenue rising 14% on strong aftermarket sales and New Energy applications, though the company noted continued caution in large capital project spending amid geopolitical uncertainty. Graham's SG&A expenses for the year rose to $43.4 million from $38.9 million, reflecting investments in people and technology as well as acquisition-related costs.