Graham Corporation (GHM) has reported 34.36 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $1.30 million, or $0.13 a share in the quarter, compared with $1.98 million, or $0.20 a share for the same period last year.

Revenue during the quarter dropped 7.33 percent to $21.13 million from $22.80 million in the previous year period. Gross margin for the quarter contracted 758 basis points over the previous year period to 23.71 percent. Total expenses were 91.68 percent of quarterly revenues, up from 87.33 percent for the same period last year. That has resulted in a contraction of 435 basis points in operating margin to 8.32 percent.

Operating income for the quarter was $1.76 million, compared with $2.89 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $3.45 million compared with $2.42 million in the prior year period. At the same time, adjusted EBITDA margin improved 575 basis points in the quarter to 16.34 percent from 10.60 percent in the last year period.

James R. Lines, Graham’s president and chief executive officer, commented, "During this quarter we benefited from conversion of certain larger nuclear market orders that had been in backlog. However, we are continuing to experience difficult energy-related market conditions, not only causing delays and pricing pressure for major project work but short cycle projects as well. These factors, along with low capacity utilization within our operations, resulted in lower comparative margins on a year-over-year basis. Despite the difficult operating environment, we continue to execute profitably and maintain our commitment to Graham’s longer-term growth objectives."

Graham Corporation projects revenue to be in the range of $85 million to $95 million for financial year 2017.

Cash flow from investing activities was $5.84 million for the first half as against cash outgo of $0.52 million in the last year period.

The company has spent $1.77 million cash to carry out financing activities during the first six months as against cash outgo of $4.94 million in the last year period.

Cash and cash equivalents stood at $31.27 million as on Sep. 30, 2016, up 6.32 percent or $1.86 million from $29.42 million on Sep. 30, 2015.

Working capital declines
Graham Corporation has witnessed a decline in the working capital over the last year. It stood at $76.08 million as at Sep. 30, 2016, down 7.23 percent or $5.93 million from $82.01 million on Sep. 30, 2015. Current ratio was at 3.61 as on Sep. 30, 2016, down from 4.24 on Sep. 30, 2015.

Cash conversion cycle (CCC) has decreased to 109 days for the quarter from 129 days for the last year period. Days sales outstanding went up to 139 days for the quarter compared with 135 days for the same period last year.

Days inventory outstanding has decreased to 22 days for the quarter compared with 66 days for the previous year period. At the same time, days payable outstanding went down to 52 days for the quarter from 72 for the same period last year.