Read How Analysts Reacted To Graham's Q3 Miss, Outlook Cut, Dividend Suspension

Colliers Securities analyst Richard Ryan downgraded Graham Corp GHM from Buy to Neutral.
Maxim Group analyst Tate Sullivan lowered the price target on Graham to $15 (an upside of 79.6%) from $17 and maintained a Buy rating on the shares.
Yesterday, the company reported third-quarter revenue growth of 6% year-over-year to $28.77 million, missing the consensus of $36.53 million.
Sales to the defense industry were $16.6 million, up from $4.5 million, while sales to the refining industry were $4.0 million, down from $16.5 million.
The gross margin fell to 1.9% from 22.9% a year ago. The company reported an operating loss of $(4.6) million, compared to a profit of $1.3 million a year ago.
EPS loss was $(0.35) versus $0.11, missing the consensus of $0.21.
Reported an adjusted EBITDA of loss $(2.6) million, compared to $1.8 million a year ago.
The company says the significant decline in gross profit and contraction of gross margin reflected the higher-than-expected costs related to the defense business at its Batavia operations.
It held cash and equivalents of $14 million. Net cash used by operating activities for the nine months was $14.6 million compared with $0.7 million of cash generated a year ago.
The company suspended its dividend subject to its analysis of capital allocation priorities and any requirements of a revised lending agreement.
Backlog at December 31, 2021, was $272.6 million, a 17% increase from $233.2 million at September 30, 2021. The company expects ~40% - 50% of orders currently in the backlog to be converted to sales within one year.
FY22 Guidance: Graham lowered its revenue outlook to $120 million - $125 million from $130 million - $140 million, below the consensus of $132.25 million.
It sees Adjusted EBITDA to be a loss of ~$(5) million (prior view $7 million - $8 million).
It expects a gross margin of ~8% - 10% (previous view 17% - 18%).
4Q Outlook: The company expects revenue of $37 million - $42 million and breakeven adjusted EBITDA.
Price Action: GHM shares are trading lower by 28.89% at $8.37 on the last check Tuesday.

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