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EX-32.1 - EX-32.1 - GRAHAM CORPghm-ex321_10.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ___________

Commission File Number 1-8462

 

GRAHAM CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

16-1194720

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

20 Florence Avenue, Batavia, New York

14020

(Address of principal executive offices)

(Zip Code)

585-343-2216

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, Par Value $0.10 Per Share

 

GHM

 

NYSE

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes     No  

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes     No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definition of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

  

 

Accelerated filer

  

Non-accelerated filer

  

 

Smaller reporting company

  

Emerging growth company

  

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes     No  

As of January 24, 2020, there were outstanding 9,891,052 shares of the registrant’s common stock, par value $.10 per share.

 

 

 

 


Graham Corporation and Subsidiaries

Index to Form 10-Q

As of December 31, 2019 and March 31, 2019 and for the Three and Nine-Month Periods Ended December 31, 2019 and 2018  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2


 

GRAHAM CORPORATION AND SUBSIDIARIES

FORM 10-Q

DECEMBER 31, 2019

PART I – FINANCIAL INFORMATION

3


Item 1.

Unaudited Condensed Consolidated Financial Statements

GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(Amounts in thousands, except per share data)

 

 

(Amounts in thousands, except per share data)

 

Net sales

 

$

25,286

 

 

$

17,198

 

 

$

67,522

 

 

$

68,190

 

Cost of products sold

 

 

21,242

 

 

 

13,456

 

 

 

53,816

 

 

 

51,079

 

Gross profit

 

 

4,044

 

 

 

3,742

 

 

 

13,706

 

 

 

17,111

 

Other expenses and income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

4,441

 

 

 

4,249

 

 

 

12,844

 

 

 

13,518

 

Selling, general and administrative – amortization

 

 

 

 

 

59

 

 

 

11

 

 

 

178

 

Other expense

 

 

 

 

 

 

 

 

523

 

 

 

 

Other income

 

 

(87

)

 

 

(206

)

 

 

(261

)

 

 

(618

)

Interest income

 

 

(318

)

 

 

(404

)

 

 

(1,080

)

 

 

(1,044

)

Interest expense

 

 

2

 

 

 

5

 

 

 

9

 

 

 

8

 

Total other expenses and income

 

 

4,038

 

 

 

3,703

 

 

 

12,046

 

 

 

12,042

 

Income before provision for income taxes

 

 

6

 

 

 

39

 

 

 

1,660

 

 

 

5,069

 

(Benefit) provision for income taxes

 

 

(3

)

 

 

(56

)

 

 

364

 

 

 

824

 

Net income

 

$

9

 

 

$

95

 

 

$

1,296

 

 

$

4,245

 

Per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

 

 

$

0.01

 

 

$

0.13

 

 

$

0.43

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

 

 

$

0.01

 

 

$

0.13

 

 

$

0.43

 

Weighted average common shares

  outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,884

 

 

 

9,832

 

 

 

9,874

 

 

 

9,817

 

Diluted

 

 

9,888

 

 

 

9,845

 

 

 

9,877

 

 

 

9,832

 

Dividends declared per share

 

$

0.11

 

 

$

0.10

 

 

$

0.32

 

 

$

0.29

 

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

4


GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

 

Net income

 

$

9

 

 

$

95

 

 

$

1,296

 

 

$

4,245

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

88

 

 

 

10

 

 

 

(135

)

 

 

(323

)

Defined benefit pension and other postretirement plans net

of income tax expense of $55 and $48, for the three months

ended December 31, 2019 and 2018, respectively, and

$164 and $145 for the nine months ended

December 31, 2019 and 2018, respectively

 

 

194

 

 

 

170

 

 

 

583

 

 

 

510

 

Total other comprehensive income

 

 

282

 

 

 

180

 

 

 

448

 

 

 

187

 

Total comprehensive income

 

$

291

 

 

$

275

 

 

$

1,744

 

 

$

4,432

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

5


GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

December 31,

 

 

March 31,

 

 

 

2019

 

 

2019

 

 

 

(Amounts in thousands, except per share data)

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,851

 

 

$

15,021

 

Investments

 

 

59,000

 

 

 

62,732

 

Trade accounts receivable, net of allowances ($35 and $33 at December 31 and

   March 31, 2019, respectively)

 

 

17,901

 

 

 

17,582

 

Unbilled revenue

 

 

14,321

 

 

 

7,522

 

Inventories

 

 

20,408

 

 

 

24,670

 

Prepaid expenses and other current assets

 

 

1,289

 

 

 

1,333

 

Income taxes receivable

 

 

772

 

 

 

1,073

 

Assets held for sale

 

 

 

 

 

4,850

 

Total current assets

 

 

124,542

 

 

 

134,783

 

Property, plant and equipment, net

 

 

16,906

 

 

 

17,071

 

Prepaid pension asset

 

 

4,920

 

 

 

4,267

 

Operating lease assets

 

 

283

 

 

 

 

Other assets

 

 

150

 

 

 

149

 

Total assets

 

$

146,801

 

 

$

156,270

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of finance lease obligations

 

$

47

 

 

$

51

 

Accounts payable

 

 

9,253

 

 

 

12,405

 

Accrued compensation

 

 

4,855

 

 

 

5,126

 

Accrued expenses and other current liabilities

 

 

2,835

 

 

 

2,933

 

Customer deposits

 

 

28,816

 

 

 

30,847

 

Operating lease liabilities

 

 

153

 

 

 

 

Liabilities held for sale

 

 

 

 

 

3,525

 

Total current liabilities

 

 

45,959

 

 

 

54,887

 

Finance lease obligations

 

 

61

 

 

 

95

 

Operating lease liabilities

 

 

122

 

 

 

 

Deferred income tax liability

 

 

1,273

 

 

 

1,056

 

Accrued pension liability

 

 

726

 

 

 

662

 

Accrued postretirement benefits

 

 

619

 

 

 

604

 

Total liabilities

 

 

48,760

 

 

 

57,304

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $1.00 par value, 500 shares authorized

 

 

 

 

 

 

Common stock, $.10 par value, 25,500 shares authorized,

   10,700 and 10,650 shares issued and 9,884 and 9,843 shares

   outstanding at December 31 and March 31, 2019, respectively

 

 

1,070

 

 

 

1,065

 

Capital in excess of par value

 

 

26,057

 

 

 

25,277

 

Retained earnings

 

 

91,900

 

 

 

93,847

 

Accumulated other comprehensive loss

 

 

(8,385

)

 

 

(8,833

)

Treasury stock (816 and 807 shares at December 31 and March 31, 2019,

   respectively)

 

 

(12,601

)

 

 

(12,390

)

Total stockholders’ equity

 

 

98,041

 

 

 

98,966

 

Total liabilities and stockholders’ equity

 

$

146,801

 

 

$

156,270

 

 

See Notes to Condensed Consolidated Financial Statements.

 

6


GRAHAM CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Operating activities:

 

(Dollar amounts in thousands)

 

Net income

 

$

1,296

 

 

$

4,245

 

Adjustments to reconcile net income to net cash (used) provided by operating

   activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

1,468

 

 

 

1,469

 

Amortization

 

 

11

 

 

 

178

 

Amortization of unrecognized prior service cost and actuarial losses

 

 

747

 

 

 

655

 

Equity-based compensation expense

 

 

731

 

 

 

797

 

(Gain) loss on disposal or sale of property, plant and equipment

 

 

(2

)

 

 

30

 

Loss on sale of Energy Steel & Supply Co.

 

 

87

 

 

 

 

Deferred income taxes

 

 

33

 

 

 

128

 

(Increase) decrease in operating assets:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(438

)

 

 

3,050

 

Unbilled revenue

 

 

(6,799

)

 

 

(2,011

)

Inventories

 

 

4,225

 

 

 

1,813

 

Prepaid expenses and other current and non-current assets

 

 

(7

)

 

 

(773

)

Income taxes receivable

 

 

301

 

 

 

770

 

Operating lease assets

 

 

176

 

 

 

 

Prepaid pension asset

 

 

(653

)

 

 

(893

)

Increase (decrease) in operating liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

(3,036

)

 

 

(8,136

)

Accrued compensation, accrued expenses and other current and non-current

   liabilities

 

 

(299

)

 

 

946

 

Customer deposits

 

 

(1,938

)

 

 

6,177

 

Operating lease liabilities

 

 

(101

)

 

 

 

Long-term portion of accrued compensation, accrued pension liability

   and accrued postretirement benefits

 

 

79

 

 

 

90

 

Net cash (used) provided by operating activities

 

 

(4,119

)

 

 

8,535

 

Investing activities:

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(1,389

)

 

 

(1,471

)

Proceeds from disposal of property, plant and equipment

 

 

2

 

 

 

 

Proceeds from the sale of Energy Steel & Supply Co.

 

 

602

 

 

 

 

Purchase of investments

 

 

(141,414

)

 

 

(101,343

)

Redemption of investments at maturity

 

 

145,146

 

 

 

73,633

 

Net cash provided (used) by investing activities

 

 

2,947

 

 

 

(29,181

)

Financing activities:

 

 

 

 

 

 

 

 

Principal repayments on finance lease obligations

 

 

(38

)

 

 

(81

)

Issuance of common stock

 

 

24

 

 

 

171

 

Dividends paid

 

 

(3,163

)

 

 

(2,851

)

Purchase of treasury stock

 

 

(230

)

 

 

(146

)

Net cash used by financing activities

 

 

(3,407

)

 

 

(2,907

)

Effect of exchange rate changes on cash

 

 

(143

)

 

 

(228

)

Net decrease in cash and cash equivalents, including cash classified within current

   assets held for sale

 

 

(4,722

)

 

 

(23,781

)

Plus:  Net decrease in cash classified within current assets held for sale

 

 

552

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(4,170

)

 

 

(23,781

)

Cash and cash equivalents at beginning of period

 

 

15,021

 

 

 

40,456

 

Cash and cash equivalents at end of period

 

$

10,851

 

 

$

16,675

 

 

See Notes to Condensed Consolidated Financial Statements.

 

7


 

 

GRAHAM CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 

NINE MONTHS ENDED DECEMBER 31, 2019

 

(Unaudited)

 

 

 

 

Common Stock

 

 

Capital in

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

Par

 

 

Excess of

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Par Value

 

 

Earnings

 

 

Loss

 

 

Stock

 

 

Equity

 

Balance at April 1, 2019

 

 

10,650

 

 

$

1,065

 

 

$

25,277

 

 

$

93,847

 

 

$

(8,833

)

 

$

(12,390

)

 

$

98,966

 

Cumulative effect of change in

  accounting principle

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(80

)

 

 

 

 

 

 

 

 

 

 

(80

)

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

82

 

 

 

107

 

 

 

 

 

 

 

189

 

Issuance of shares

 

 

83

 

 

 

8

 

 

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeiture of shares

 

 

(34

)

 

 

(3

)

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(988

)

 

 

 

 

 

 

 

 

 

 

(988

)

Recognition of equity-based

  compensation expense

 

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

88

 

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(230

)

 

 

(230

)

Balance at June 30, 2019

 

 

10,699

 

 

 

1,070

 

 

 

25,360

 

 

 

92,861

 

 

 

(8,726

)

 

 

(12,620

)

 

 

97,945

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,205

 

 

 

59

 

 

 

 

 

 

 

1,264

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,087

)

 

 

 

 

 

 

 

 

 

 

(1,087

)

Recognition of equity-based

  compensation expense

 

 

 

 

 

 

 

 

 

 

324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

324

 

Issuance of treasury stock

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

49

 

Balance at September 30, 2019

 

 

10,699

 

 

 

1,070

 

 

 

25,714

 

 

 

92,979

 

 

 

(8,667

)

 

 

(12,601

)

 

 

98,495

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

282

 

 

 

 

 

 

 

291

 

Issuance of shares

 

 

2

 

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24

 

Forfeiture of shares

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,088

)

 

 

 

 

 

 

 

 

 

 

(1,088

)

Recognition of equity-based

  compensation expense

 

 

 

 

 

 

 

 

 

 

319

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

319

 

Balance at December 31, 2019

 

 

10,700

 

 

$

1,070

 

 

$

26,057

 

 

$

91,900

 

 

$

(8,385

)

 

$

(12,601

)

 

$

98,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8


 

 

 

 

 

GRAHAM CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 

NINE MONTHS ENDED DECEMBER 31, 2018

 

(Unaudited)

 

 

 

 

Common Stock

 

 

Capital in

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

Par

 

 

Excess of

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Par Value

 

 

Earnings

 

 

Loss

 

 

Stock

 

 

Equity

 

Balance at April 1, 2018

 

 

10,579

 

 

$

1,058

 

 

$

23,826

 

 

$

99,011

 

 

$

(8,250

)

 

$

(12,296

)

 

$

103,349

 

Cumulative effect of change in

  accounting principle

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,022

)

 

 

 

 

 

 

 

 

 

 

(1,022

)

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,323

 

 

 

(29

)

 

 

 

 

 

 

2,294

 

Issuance of shares

 

 

59

 

 

 

6

 

 

 

96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

102

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(885

)

 

 

 

 

 

 

 

 

 

 

(885

)

Recognition of equity-based

  compensation expense

 

 

 

 

 

 

 

 

 

 

260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

260

 

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(146

)

 

 

(146

)

Balance at June 30, 2018

 

 

10,638

 

 

 

1,064

 

 

 

24,182

 

 

 

99,427

 

 

 

(8,279

)

 

 

(12,442

)

 

 

103,952

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,827

 

 

 

36

 

 

 

 

 

 

 

1,863

 

Issuance of shares

 

 

4

 

 

 

 

 

 

 

69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

69

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(983