Graham (GHM) 31 May 182018 Q4 Earnings call transcript

Company Profile

Participants

Karen Howard	Investor Relations, Executive Vice President at Kei Advisors LLC
Jim Lines	President and Chief Executive Officer
Jeff Glajch	Vice President of Finance & Administration, Chief Financial Officer and Corporate Secretary
Joe Mondillo	Sidoti & Company
Bill Baldwin	Baldwin Anthony Securities
Gerry Heffernan	Walthausen & Co.

Call transcript

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Operator

Greetings and welcome to Graham Corporation fourth quarter and full fiscal year 2018 financial results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to Graham conference Corporation. like Howard, to now for IR would turn over the Karen I

Karen Howard

results XXXX Thank We results. us the appreciate Sherry your Graham's you and joining today good to full quarter and fourth morning everyone. of year fiscal discuss

should the release distributed copy that of this the wire morning. a have was You news across

also slides associated are today. here have with we We providing the commentary that

you website don't you have If at find company's on the or slides, the them can the www.graham-mfg.com. release

me Jim Jim fiscal our results Lines, with will and today outlook. Executive Officer Glajch, quarter President year the call Jeff Chief as our Chief the On and are well for the review and our as and Officer. Financial Jeff

We Q&A. then will the lines open for

during These well during believe factors Securities actual our the discuss to Exchange as is can call. As These I differ and you non-GAAP are in the with with other are useful will which some point today's risks Those apply slide evaluating are aware, factors, statements risks Commission. in on we also website in on well financial materially out cause documents or filed the from we and to statements our earnings at discussion the be we performance. the want company as found well uncertainties and as other documents this by may measures, during call, deck are and release as and sec.gov. which that Q&A. other future and could forward-looking make events to as subject stated to uncertainties as provided results what some

additional substitute as in results should accordance with not for this information isolation in or consider a You presentation the prepared GAAP. of

is tables Jim? to Jim pleasure of non-GAAP begin. my to to with reconciliations accompanying to it that, comparable the provided have earnings the turn over release. We call And today's in measures GAAP

Jim Lines

every a $XX.X referring conference prepared I quarters. turn you Thank of in will our XXXX, everyone. four timeframe Revenue fiscal quarter participation orders quarters were third remarks We two for to extent to the We removing surge new orders in totaled which is strong in the contrast totaled through at This by $XXX.X full-year there had charges loss quarter. moment upward Good period the of markets. XX-month while your the another slide nice that $XX.X fourth downturn Striking corresponding our large is that was year from consequence call. with refining from quarters to two the quarter also million. income of million the a level a than for $X.XX move previous in million our morning million We showed restructuring for to markets million. the noting totaled that of were the Karen. the three. along begin in appreciate the share the record for quarters compared to Also, reflected with orders by mentioned two orders year. $XX year quarter. strong $XX.X the quarter Steel in orders period assets revenue Worth approximately XXXX of similar with orders refining fourth on writing end slide comparison million. the the occur related year of full-year orders. million, deepest second for net our highlights cyclical quarter. naval last and year I orders our quarter has more market was adjusted million were a for believe to quarter tied Income an On started ago. four. the refining to the during Orders year-end, impairment $X.X $X.X Sales of third that in total were Please was XX% the included impacted orders improvement XX% approximately of that down quarter the charges. the for compared reported basis, $XX $XX $XX bookings include with level in last per earlier. don't full and bookings of orders $XXX.X two million. we Revenue our markets, were that a million earnings in fiscal was down were backlog lesser to total a million, Full $XX.X million Energy

with earlier. was refining third across through to However, Sales no there FY approximately FY markets quarter Full of levels while of for that the XXXX year revenue dismal escaping on and fiscal other the quarter of level let the revenues market. quarter second XX% quarter the downturn sales relative bottom Jeff up XXXX that will $XX.X quarter was represents that the will year is domestic in were sequential end order is down ending similar XXXX quarter impact to $XX.X December and was the provide year. were Jeff? XX% improvement was full XXXX. million. of and anemic second totaled million I XXXX. more of versus I the in the the $XX.X financial end details There million. our sales markets the expand the compared to and believe to down that were

Jeff Glajch

morning On and you to everyone. Thank slide please. six, good Jim

in margin and $XX.X which XX% down quarters Gross quarter and XX% domestic, XX.X%. split results EPS XX% net down sales last was $X.XX As downturn share, domestic and to was Reported rough international. the QX per was share. XX% per bottom year's Sales Adjusted compared appear Jim with quarter. the million $XX.X $X.X in last fourth the the fiscal have in with the of pretty reflective income and international The XX.X%, of financial quarter from and mentioned, compared from last XX% of the the be last margins was were this. been fourth and QX, down for are million, year's quarter $XXX,XXX X% year. in fourth year of from three EBITDA $X.XX were

Adjusting tax $X.XX fourth declined that slide per to Sales On law. this had to we million, we earnings year tax However, last quarter year. the and in new for look favorable a down in share seven, $XX.X to $XXX,XXX full year. at results. $XX.X the resulted related of the adjustment from million

insurance favorability last $XX.X As were a worked Gross to compared write-down charges law. of the well new and Sales business which margin low XX of XX.X% both for When XX% as for through net months EBITDA was the down from of international Jim XX% was the due flat at settlement. adjusted EBITDA booked the the QX, by XX.X%. impairment as points of $XX.X gross tax partially to were international. number our restructuring adjusted year, last year. $XX.X which year impact implementation XX% year-over-year. million, XXX lower the slide was please. one-time the the SG&A adjust last basis million from level $X.XX, impacts of X.X%, volume profit up being in SG&A related mentioned, however million, we domestic the that, primarily ago. which well was On to year. impact occurred and income net of $X.XX And eight, $XX.X offset income with was included bookings XX% last for was down year to lower from and nuclear year as year's as exclude XX year margins charges domestic, for were out you from compared last with $XXX,XXX the

flow, million to cash by level cash million in capital $X.X $XX.X our spending or $X.XX XXXX. $X.X fiscal XXXX paid dividend in fiscal million $X see operating the in of this in will We year, above cash had and capital good from spending million increased position well per share. You spent $XXX,XXX flow

XXXX We between $X.X fiscal expect million million. $X to capital and spending in be

and decided pipeline Our acquisition be over the for a to discipline. peeled in process market to company purchase for too management opportunity Therefore, off correct Identifying like their its fourth We position past well diligence we the and the price to quarters expectations. strong. we into of the a business we ultimately company the team purchase their diligence this were meet continues were predictability quarter. that, two requires volatile us however

team identify are focused balance long-term our utilizing development our all benefits to on shareholders. the and to team, However, management our and strong close Directors near and opportunistically and acquisitions have on business our Board sheet of cash both our which

We fiscal fiscal and will outlook into presentation XXXX. complete continue this effort With Jim our strong that, comment XXXX. our will for on

Jim Lines

in slide that Thank actively for I orders in quarters refer terrific now continues broad you two We in uptick markets all remained past the of provides foundation projects array of our XXXX. bidding The fiscal XX. a a and to-date. Jeff. to

revamp that and a our am what in fourth the uptick to and market is as for from million. up On markets. markets I our up for in to in quarters released customers end did a purchase for facilities. of four orders a of key orders fourth orders That third drove Our were and refining naval earlier number quarter compared our each existing year the the markets. Note in due $XXX.X levels to quality Orders And they well. orders for the has at The as $XX XX. to is naval orders. which improved end recent up our record million. mix were refining market end were by backlog measurably extremely slide of backlog pleased price upgrades

loading Therefore average margin that provide markets the due at rough was orders bottom the highest may through positive. past for taken all that we the to backlog Thus, in the worked revenue. have in we recent backlog new noted operations. of refining Also, on because margins orders quality our the was that and is uptick You in available improving refining and equipment concentrated orders. is cycle a recall, we most on

naval Lastly, base years our asset extends certain increases our two that three in utilization which entering of its course revenue large cycle to levels. backlog and lowers for cases, is

Importantly, XX% backlog for shipment across is X/XX the projected XXXX. fiscal to planned or of XX%

various $XX.XX tax downside $XX Initial of pipeline. Gross rate and to upside And will million. There There between range top in $XX is quotation well. XX% is XX%. our topline some securing to to will on XX% between fiscal potential effective from Moving will orders year line XXXX. as be the to in guidance our and the million risk tied success guidance is timing to range and be million. our $XX and be SG&A full between for margin XX%. million for

However, we higher. topline you. line about open the Sherry, are for questions. optimistic Thank the please driving

Operator

[Operator Instructions].

Joe question is from Mondillo with Company. Please proceed. & Our Sidoti first

Joe Mondillo

Hi guys. morning. Good

Jim Lines

Joe. morning Good

Jeff Glajch

Joe. morning Good

Joe Mondillo

Just two? to my to there SG&A. hit any So that's commissions question in could over year may that backlog related on first anticipating. was that? have little if going based you refining A on low that expenses, be all is oil the abnormally was last selling compensation on wondering you or Or I the comment Is is the XXXX? higher than that

Jeff Glajch

Joe, this Jeff. is

we the additional impact low above. and impact fiscal in there is XXXX. that of bringing was an compensation Certainly, hiring of some some resource All are is on level an of onboard. There

example, we are look we that beyond take fiscal in we commercial but being onboard. the late him our will sure full adding of For look just Vice President Sales XXXX, key the in as of markets. not and February of hired in we are looking us to a year that have our in and advantage the able resources we we forward, front think of to obviously impact opportunities some new And are at to team make

to adding commission we the fiscal system. activities around been downturn So as will XXXX Obviously, we what last adding there add, our in have some some we we our pretty mentioned, some SG&A way worked be on as as tight comp, of through refining as need the are and as you additional resources. particularly you of couple and XXXX just well know, years,

we are, fortunate at And occur likely the So be end enough SG&A, our some end revenue as or guidance that. lower to as for we reason, all Jim for and our we that it's of talked range The beyond perhaps at range push more if the were the the of really SG&A. revenue, are, above. to middle in range is Jim range the likely more for lower about range of mentioned, if to revenue upper the end higher to clearly if

Joe Mondillo

the revenue have Okay. I been last million of Could of XXXX, peak years? saw several of sort going fiscal to the the of back Just million $XX.X $XXX you that you changes the over SG&A. and talk made am about

of not of changes peak million am I of So over to pretty SG&A. at that $XX at peak made you much yet? the looking are now $XX sort back million revenue we revenue when have talk that just causing been SG&A Could to years about sort are and what peak

Jeff Glajch

Sure.

really some it, too Clearly, you is got that to toward inflationary in So part future. again, the you have of can't some resources issues adding there look offset.

the have One that areas have rising been by impacted costs. of been healthcare not

to those able been under control. have keep We

our in that growth it's making step-up believe beyond we team, temper the team is beyond might believe locked but and opportunities that but our for just though So growth not got we additions, and this that sure down chance really, nothing XXXX there again, adding towards that. that, XXXX good yet. fiscal some we a to there is we a for If looking have of future we don't again, those case beyond XXXX is fiscal

Joe Mondillo

of guidance. revenue ask I about guidance revenue then your your about backlog. like in the to And wanted already looks almost Okay. It is XX% your XX-month

backlog very the going healthy year. a have So you into XX-month

the If of talk be trending? could how quantify part given you know short much light, XX-month that backlog? a XXXX do wondering you cycle little you in could and you Just on And fiscal that's how have your the about guide just made business? in could the revenue if if up what

Jim Lines

Hi is Joe, this Jim.

talk at sizable from again, backlog coming us what's Really, in it to risk, we the me fabrication. about that very correlates us caused as see that as to little We execution, some tugging and where management through that revenue fairly releases our tied not to We converted. the we being put in of to to us perspective at get customer proceed feel to to revenue guidance it. to tied naval our with designs are drive risk. get our detail. put but a Let confident a this the from ability going cycle frozen That's that, it it

you see there. is higher in risk infer And which come do as with measurable. would backlog XX% we up suggested, guidance However, that, at a And the result, it's the fairly end as low we a set terms some XX%-ish the of XX%. of year, in been backlog range year our typically of what the full think bottom revenue for entering would historical has it cycle be. We although represent as as at

can with cautious cycle are some bit backlog just revenue we the So design little into first-generation and we in we Navy our as of the that's on a float work model. the

SG&A, timeframe are have that We little about our up level, when the it cautious that. XX% cited you were bottom. short been respect are about we cycle with off to that On to XXXX from a around from work, compared we XX% but

more selling how expansion this We So outlook implying but seeing spend. bullish we there. look bullish level we going as to in said, multi-year additional feel more Around XXXX a at according we towards the that's meter we in see some are in to SG&A fiscal forward confident still expansion to I back our which about the and cycle, the hires are the improvement that a orders. But activity to we it's put Jeff translating down. our am rather pipeline workforce, not of where it's point, the for or XXXX. taking SG&A, seeing, us quotation are activity returning at

had of However, add in quickly we are as indicated going to how mindful his we remarks, those expenses. Jeff be

this the So supports as not will upper the envision, bullish gives adjust on end we outlook. multi-year our accordingly. playing range you out that we That's

shipyards but conversion backlog biggest the revenue ability the about we designs to to is get the are had, tied execute to have are around after by the frozen. guidance we to some ability cycle not really, naval concern So and our to question it that released which you our tied the it,

and $XX more to seems still million in need backlog a our for we chasing been not also have large have of but in to $XX as out that's with mind, that project work Pipeline about fine, bids over these we consequence, control no probably the We million quarters. measured fill we that. several been And have year.

Our of the customers pushing some to keep these right.

very We some strong have optimism.

that rest have us prepared caused what's first to to closing and naval we closes where have been just put put to a is us close where quarter my We In the I to quarter what topline remarks, I after will are with the position and out a begin it be to view the year. of the in we of guidance what clear better fill work to in able share the about optimistic our wanted you higher. mentioned at we driving initially. tugging the

Joe Mondillo

Okay. That's helpful.

of So just month questionable XX the $XX is if out that math, some roughly the that you though, backlog. million, including comes do of clarifying it to Navy be, the backlog,

So some beyond XX of month? pushed could that be out

Jim Lines

mind. guidance to going quarter-to-quarter those in $XXX expect, that's that, not It for up to of and have related affect the I midpoint through that XX%. If revenue cited, bear the Right. planned of But could effect, Of that and new And we of as to as is a naval we timing it of with to are range. XX% million have recovery. between XX% the into We fiscal we cycle it work make represents doesn't million it orders goes risk, to took X% close number If indication get $XX orders plow an that basically we the the cycle. well, right of new our somewhere ability us. the as XXXX. to the

Joe Mondillo

color, Jim. Okay. Thanks. That's good

on an In cycle terms absolute quantify to what that work, of the short revenue does generally, annually? basis,

Jim Lines

heard are say two-thirds typically, we work. over cycle, us It's you maybe the one-third short project have years,

short an to to range $XX think million in In for basis. terms of million the of that on cycle tend annual absolute dollars, $XX we work

Joe Mondillo

talked said from roughly, bottom. you you growing And the that's Okay. XX%

maybe So annually it's right now? around XX% growing

Jim Lines

Well, I just clarify, let clear. me wasn't probably

peak. XX% are We about XXXX off the from

and trough the was XXXX XXXX. from XX% up are to We comparable

Joe Mondillo

XXX color. for to year? the gross of margin guided Is XX-month XX% that good near-term backlog you the does pretty or the How comparable? then the backlog it compared that much pretty to Okay. to That's And backlog.

Jim Lines

our stated is was too in to coming upward that's out which is getting asset will and lowered higher, granular little and backlog averaging margin what of what guidance reflective of move my inch Without gross backlog, you If pushed remarks, a in overall a on more but superior little that's that basis, qualitative base coming And backlog a we what's in up. we a have our great. topline our the margin. see into margin overall up bit prepared through of gross

Joe Mondillo

those big, sort So year? of super-high these potentially like be be Just of of oil fiscal see you there wondering don't Just if gross gross this really XXXX cognizant margin anything projects? any or could of one that. the two of any those those Are another one Are comp? to if margin? refining a wanted of tough boosting orders, is

Jim Lines

a content, outlier No. There large where effect not is. high represents up, project very gross it am not an XXXX an some I about XXXX is margin the which judging material spent of margins to were on that shot time But to expect we go has upside on the the in relative quarter to well that is has outlier why as third nothing The shot up, some toward. profile. our an talking

Joe Mondillo

XXXX finally be to of to be in am And I essentially. risk was next end terms coming, think that's XXXX. even of Navy for a supposed I XXXX? falling up Okay. backlog of stronger XXXX, some I backlog fiscal terms know I is just the of potentially the than order submarine into expectations does at the much think, years. over starting Say in couple year then shipped of fiscal just sort wondering that back fiscal sort big of XXXX, fiscal in And backlog this

of now, going so. in wondering last to I mentioned to was right of I look flat be XX% timing sort if XXXX the call, think everything relative you of what just XXXX, XXXX? potentially does on to And am hits So sort up like terms or

of could give you how of next color on about a If years? little us the that part for to think couple revenue

Jim Lines

From broad naval around rolling we couple quarter for at to In it's sense, conversions, I would our a Sure, the a the backlog XXXX timing risk. strategy backlog naval risk and of that risk. made modeling a just of is a how are and delay a in see XXXX, risk suggest Joe. The two that's revenue backlog we comment what in I and XXXX that the the quarter about expecting and not XXXX risk quarter as into cycle. move million are the revenue cited to now. are those into I we or the it XXXX level at beyond And was revenue getting $XX-ish potential XXXX that we one the work cycle cycle peak out,

Jeff Glajch

is Jeff. Joe, this

Just in mentioned, be our Jim to point the of $XX and of to expectation in growth That of XXXX. fiscals would just be XXXX fiscal north additional add we one million here. expect XXXX. off current

or beyond as fiscal the whether XXXX expect will we delay either expecting hits two, case, there revenue fiscal XXXX. to just mentioned, it would as a In are the expect would is if have we in So XXXX. we Jim a or fiscal revenue of quarter

Joe Mondillo

Okay. And fiscal XXXX, you are tracking at about what?

Jim Lines

is said bit. but to in it. depending explicitly that of to would haven't happens mid-teens the, potential mid being couple a a Depending be, of orders with probably point, We at way happens delayed probably on have what put the what the somewhere that upper better the on this with we teens

Joe Mondillo

hop else in anyone Okay. Great. Thanks. queue All has I right. in anything. back will case

Jim Lines

Joe. you Thank

Operator

Instructions]. [Operator

Anthony Please is Securities. with Our Baldwin Bill next proceed. from Baldwin question

Bill Baldwin

for Hi. you Thank Good Jim Jeff. and time. your morning

Jim Lines

Hi Bill.

Bill Baldwin

is A Or that but million. were in you target talking about the one a know the the a still talked peak while, looking with next Or couple I the revenues has about that of Is it's it? far questions to? as since been that objectives time referring still that changed that of time are you something at here. are you that fellows cycle? you as cycle last $XXX benchmark peak Jim, area

Jim Lines

and still can get have goal. our powder sense, there Organically, get But we think objective to will there. an go require where or through go have achieve classic the to that capital and a we of to business M&A we in won't putting M&A want our work an we organically to is forms strategy. that combinations. certainly And That dry a other without as and we we where

Bill Baldwin

do in over environment you the gross think As where When backlog. you out, obviously little bit up, years, good that model better several you? in margins your gross you margins your could getting are next moving a for the you normalize cycles look a at

forth. indicated made there I than you we spending that improve the would out using, rather think a margins some Is so be Jim, should to and to level in capital you to for productivity XX% XX% XX% XX% be area? gross looking that area

Jim Lines

margin mid-cycle We sort still XXs. our in think of margin of as gross a the upper XXs, lower

mind Now intent as segment what gross growing strategy borne the margin, fine be op line. naval naval the needs accretive in or are the blends we at to margin in weighting And remark but make of grow. of I has is program that business. a we lower is on that the because our

are we strategy, but So it naval op on the gross at focused the less blends for in margin margin line.

core it wanted a just the intensity, of does weighting of naval are different carry work. it's Because I program. mindful gross material to of margins is ordinary So make everyone sure than

Jeff Glajch

is this Bill, And Jeff.

the EBITDA top level. of think that at our at we modeling XXs,, that, would point on Just to in the targeted that gross level mentioned, time the Jim be looking XXs business about at low margin those upper way hot

from upper We full in as levels, cycle. of have we EBITDA level standpoint at that around an through margin EBITDA targeted an be a margin teens certainly think Jim those mentioned. XX% could We

Bill Baldwin

At mid-cycle, speak? so to

Jeff Glajch

Right.

Bill Baldwin

Right.

Okay.

next so, where as navy what orders or and us of to size types picture orders of new potential or looking give potentially? little Secondly, a they projects in of the bit as far the as Jim, might talking horizon two about a over coming the Navy, looks you be the the from, the terms year like can out that

Jim Lines

of community, an of enthusiasm the naval the chain, shipyards, vessels. because naval There as the a expand the of the well high to government fleet the supply program level is in ambitious

we U.S. a complement to period even see we providing is with So time expand more further team how Navy that demand see stronger and our how To are strategy do for we and that, that create do Navy supply, the the be with expanding we we are number that tasked satisfied work our longer naval of of we with we though, successful to us. not the should U.S. components over our expecting for do are further.

to naval expanded So demand the intend components and from doing do to cite pleased a and surge going and their I am that else Graham not that's additional Timeframe that providing. going complement is to are other than have tactics Navy programs. by equipment that currently receptiveness that, with of programs an available revenue that grow pretty program to that we our we build and also to the from naval are supplying continue then we a coming strong strategy to we and what not our more to can where do support shipyards

Bill Baldwin

super. That's good. That's

You guys are doing a good job there.

Jim Lines

Our a team is doing great job.

Bill Baldwin

Absolutely.

pushed you to to fiscal as there some begin XXXX of or kick projects in getting On do But see the start that the petrochemical these right. the and chemical front, that are are programs I proceeds? assume traction

Jim Lines

what think pretty some number North second Bill, We the are we wave America. in characterizing second early of stages are the petchem of we wave. where made, as aged we bids in that a have we are the have do

these of those and We dollar of size, close do fairly good derivative downstream projects fiscal been across for North hunting think of a a projects. have a We handful front several capacity, be process We expect next of to over in on. are those support A few gone in we that successful are focused that selling size to that American good have us XXXX we while. the resources lot ethylene petchem in of for plants. ethylene revamp have opportunities quarters

is where on on cycle. complements top fundamentals because its revenue of of top we what encouraging it So that's think improving delays terms very naval in refining of is our backlog

trough, So we a are it's not off go the bottom expand to ahead. we and whilst heading begin at expansionary off point of, more and which an revenue a will hard but -- in bouncing into to believing phase are do inflection is

Bill Baldwin

I am ahead. Jim. Go sorry,

Jim Lines

view on, bullish because we year. a why to was adding just SG&A which multi-year on is again, circle we back I are to going see

Bill Baldwin

seeing of and lastly, can in a color forth or refinery, the as what far America, And Latin are with little petchem, Absolutely. East give so as you sectors geographically, kind you us Canada? internationally Middle Europe,

Jim Lines

Sure.

seeing, are into which in capacity hadn't some which projects good couple years. space, the Middle come new is the a seen or we East in We o China finally, pipeline our refining for bid

seem some more of yet large some of to entered And clear, projects have our The but size. ones the East. have the Middle interest, investments a these is they are these cases, still of made. national in projects. in what's timing bid is are where pipeline. project Certainly, being these China strong not are They have They the fairly typical refining important fundamentals.

we about is feel or a coming very that. just up there China. And And number one the those, East. in are two, With of several So very, Middle in not good there respect for America, was that I XXXX and versus South in America. the and of boy, building to Latin think work up XXXX XXXX incredible today the was of if XXXX, just wave

a have as oil great a sands upgrades. not area of years. to sector revamp In projects metallurgical for for think of new see and be Canada, once are We for more the the that don't going capacity, sands We those although and contracted much timing installation, positive it's couple still we about today. driver the aftermarket us, is we oil of

was next came decade. over So petchem out massive we of investment wave see base. today new that our in petchem, a that There from regarding the Canada do report installed Canadian a just

We out of and of feel for work projects expansionary bullish positive. cost And pipeline, very our petchem on have our very their to low our sort today natural was home that's That's again to resources Canadian We ethylene that very tied there. natural And and there. investments successful be which a monetizing investment those turf. opportunities gas that good about some or ability new came Alberta particularly differently. just outlook in report

Bill Baldwin

Very good. to your tough Well, a this job team, congratulations during Jim, well period. and done you for

in work. on of Now position you a are that capitalize hard all to

Jim Lines

Thank the very We much, Bill. compliments. you appreciate

Operator

Walthausen Heffernan Our with from next is Co. & question Gerry proceed. Please

Gerry Heffernan

Thank Good for call. Jim. morning the Good morning you Jeff. taking

Jim Lines

Hi Gerry.

Jeff Glajch

Gerry. Hi

Gerry Heffernan

of in are year that relatively backlog at but that are the the base peak. least completed In XX% not they through comes the in at be the below of the, at term are really above the they year. business, through, trough so backlog steady has at before that that year about of And guess the part the and XX% I would regards next the the the to end revenues using stayed in a end come business we

I So if four that was understanding any press that, type curious release? of business to the you particular one segments in the know segment identify that falls of into

Jim Lines

a that short replacements. element, in A large am quarter, Sure. That also our year. and and work percentage sector. our It chem., petchem Joe. is fair tends a because from our good installed out of in also percentage a it's and I cycle come that I in base. And in parts out from sector for number cited sorry, refining a to that is

that's sectors. that's so our market. from market from two those of And and half petchem from our More it than refining is

Gerry Heffernan

stuff tear presume parts steady Okay. you that just pretty normal a wear and replacement, do that? has with And lot said, flow it have as I on a that order you and of to

Jim Lines

right. basis. see have million we Joe million half But we project And a between bit for typically somewhere a level the around parts annum of It work. cited per that like of That's is that nothing that. on our And $XX $XX business of variability. little and does business

Gerry Heffernan

forgive see the which talk talked and backlog we how to petchem? power that spoke We it. me on refining there in in as don't segment, to there? going specifically segment anything Okay. they you yet have see dramatic just about the obviously seems things If pretty you challenge in down the I up me very to did, backlog this The huge a that for in large much think obviously backlog. power last Can being we year. increase step today. Was

Jim Lines

sector, power we your use And some The to improvement verbiage, challenged. is in backlog. power our nuclear seen have

our That is improvement in energy, seen which America. tied haven't waste legislative North We biomass to can vary to to in geothermal policy backlog energy. renewables

renewables, And We in have off bottom several contracted its is over seen would our at time. the I say, nuclear backlog up quarters. point come this last

Gerry Heffernan

the on for biodiesel that Okay. the effect am like in DC. guessing you. the biodiesel And the has market you, and works that. we some to And I that seems credit get I way be for would tax renewables think stuff things into mired still

Jim Lines

and the also seen Certainly the will. put if tend industry legislative what green you chemical that changes energy for strong tax we to diesel, over policy more our sales, demand into power, it's then those when alternative At biodiesel power that's power, sales talk context about When demand away generation. create of we electrical of or we generation which last in policy, number is years. have the periods can policy of goes

Gerry Heffernan

and you, What's Thank stages the final your the wave wave? a Jim, mentioned And you wave you one good. to here. How consider for a specifics time you hold to not second of cycle would petchem the cycle will of mind the Very a I early be? thing, answer long you clarification. of

Jim Lines

years. are be we won't the wave we and more that protracted wave be two-and-a-half and reading we it we the we and elongated are hearing from wave but about interpreting what XXXX. from three more first really the saw it rush are this which opportunity how of wave than in What go to through be is what XXXX, the through that marketplace, are We will will think XXXX spanned reading XXXX second

Gerry Heffernan

correct? handle that of would you would enable wave more to flow Is I elongated order an a that a nature efficient manner. in imagine

Jim Lines

the It power surge. runs side who it certainly on we pricing surge. sales Alan is, drawback and to come The comes like massive doesn't is the team operations his the with when in a which helpful our

yang the it's So and yin of that. the

focus higher versus appetite different previously international supply talked an Another they second calls on was wave, North project on And sponsors. about maybe element have chain have tendency America for to has it cost that costs. our we lifecycle and for a a different a have the

cost. First cost versus lifecycle

So we in we potential different wave in the than saw second the are a seeing wave. margin first

Gerry Heffernan

issues may pressure? pricing what And your us you the status giving time Okay. as metal appreciate concerns prices effects well again ask labor as as compensation just your last are you you regards labor, wage of question view have you here. costs. of are Can as seeing I tariff If I and in input to your can of far give one greatly staffing our the or me affording on and your ability any to get

Jim Lines

Sure.

minutes side, day. looked supply after each cost other input we the seen it North tweet at raised tariffs, XX have around out metal still costs the American XX% sticking. rise. On with all to And chain the that went XX% We our is awe. their prices

into protected an certain that In as were in opportunity costs with cited, remarkably, we a into basis come could competition We have be to But our therefore are of watching are related input with and market been However, does. cost like entering prices we international that. international does of of where we the where our a will in play able I America, if up of markets tariff the competition different in were deal than into have XX% to cost North drive our basis. morning. went And it to the cost increase a not sales tariff do. but our a snap front we because that. in we XX% finger, We

the making did for projects. right we cost goal that our lower to with what a estimating cost to team with also be And cost don't have into great job for going that been do costs basis customer and able future into that. Our so deal input sure up have our supply inventory to our we of chain would some or of wallet is building And push that. inventory understood folks a then

have, outlook, bullish this longer the are illustrative to adding labor side, again direct is we our of term On labor our we force.

strategy sensing asking wage pretty is wages is been or a impediment are market talent in have the new ability there for has pressure am our what or hire hire an the for what for. good not inappropriate asking ramp our to there up that. that that nor is We I that

I our So our be with them do we buildout able direct will to grow. labor as and we needs align workforce expect capacity

Gerry Heffernan

Thank great. very today. time That's you your much for

Jim Lines

Thank you Good from again. you to Gerry. hear

Operator

Joe a We & Sidoti follow-up now Company. from question have Mondillo Please proceed. with

Joe Mondillo

Hi guys.

of capabilities half ways Just regarding if consultants new you outcome were year with think of talking last could I wondering to about working I or year are us revenue you on, the to streams. I update utilize late to in the Graham's maybe wondering If found a was was was year, last anything? you find that it second was? how calendar try you what of couple things. potential

Jim Lines

our handful The currently our perspective customer model, report not a markets ops of facing on their, that are us it of provided value in would we that model.

adjacencies likely highlights than there U.S. do to the more is away U.S. of Navy. can Navy with related that One and the is the that came we

there. So efforts we are certainly our focusing

the other are although those not areas strong belong we of some in management growth And have as rates. we certain areas, quite as they

markets. not good very and the came We we with But are certain belong to that of We create match conclusions process. a is and away how the product brand value. And think a certain we with about. right we us can very for it pricing in characteristics some few don't away nuggets good our exercise, was came

Joe Mondillo

that's all Actually, Great. Okay. me. for

So I appreciate you taking my follow-up.

Jim Lines

You are very welcome.

Operator

conference now of gentlemen, management session. the closing turn remarks. question-and-answer would and to I over like end the back the Ladies have we to reached for

Jim Lines

outlook for numbers. our some the asked Sherry. your Thank detailed clarify time for of I you questions thank and Jeff and as you very and Well, behind everyone your you this to morning what's

Just summary, about a are backlog our as excited exceptionally we is. where

August. We where will months to year our you can that we what update are and over much into us next next we it move you get very different quarter couple and we pleased was will of pipeline bid Thank is you view the XX guidance behind And markedly and set foundation for our update our us with the the we on quality the for helps up very as outlook our time. in years really end the quarter from your this and ago. XX

good a day. have You

Operator

Thank you. This concludes today's conference.

thank time participation. your this may and You your lines for you disconnect at

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