Vacuum and heat transfer technology provider Graham Corp. (GHM), reported Friday a decline in fourth-quarter profit, despite a 9.2% increase in sales. The company also said that it expects fiscal 2010 revenue to be down between 30% and 40% from fiscal 2009.
For the fourth quarter, net income dipped 14.6% to $3.6 million or $0.35 per share from $4.2 million or $0.41 per share in the previous year.
Net sales for the quarter rose 9.2% to $24.8 million from $22.8 million in the year-ago period.
On average, three analysts polled by Thomson Reuters expected the company to report earnings of $0.27 per share on revenue of $22.95 million in the fourth quarter. Analysts' estimates typically exclude special items.
Ejector sales increased 22.6% year-over-year to $8.5 million, while sales of condensers grew 27.3% to $7.8 million, driven by orders established in the second half of fiscal 2008 and first half of fiscal 2009, chiefly from refinery and petrochemical projects. The other product lines such as heat exchangers, and pump packages dipped 11.9% to $8.5 million.
Sales in the U.S. advanced 38.4% to $15.8 million from $11.4 million, while International sales decreased 36% to $9.0 million from $11.4 million reported in the same quarter last year.
During the fourth quarter, Graham eliminated certain management, office and manufacturing positions, which resulted in a restructuring charge of $559 thousand related to severance and related employee benefit costs. The company expects the restructuring to yield about $2.7 million in annual cost savings.
Interest income for the period decreased to $30 thousand from $227 thousand, while selling, general and administrative costs rose to $3.5 million from $3.3 million and provision for income taxes increased year-over-year to $2.0 million from $1.7 million.
For the full year, net income advanced 16.2% to $17.5 million or $1.71 a share from $15.0 million or $1.49 a share in fiscal 2008. Revenue was $101.1 million, up 17.0% from $86.4 million in the past year.
Analysts were looking for earnings of $1.63 per share on revenue of $99.21 million for the full year.
Graham's backlog was $48.3 million as on March 31, 2009, down 36% from $75.7 million a year ago. The company revealed that during fiscal 2009, its three projects worth $3.3 million were cancelled by customers and five orders valued at $4.4 million were suspended.
James Lines, Chief Executive of Graham, said, "We continue to believe in the long-term prospects of our markets, but expect fiscal 2010 to be down measurably from fiscal 2009."
Lines added that the company anticipates fiscal 2010 revenue to be down between 30% and 40% from fiscal 2009. He said the Graham expects gross margin also to be hit by the economic slowdown, due to lost leverage on lower volume, and because of the lower margins currently defined in the company's backlog as a result of reduced demand. The company foresees gross margin to range from 28% to 31% for fiscal 2010.
Lines concluded, "It is difficult to determine the length of time that the bottom of this cycle will last for us, but we have historically lagged economic recovery by about 12 months. Moreover, we believe that our order trend will be a six- to 12-month leading indicator."
GHM closed Thursday's trading session at $15.22 on the AMEX.
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