Graham Corporation (GHM) Earnings Call Transcript & Summary

Good morning, everyone. Welcome. I am excited to announce that we have a very content-rich day for Graham Corporation today. Lots of good stuff to talk about. For those of you I haven't met yet, my name is [ Rachel Jokela ], I'm the Chief Human Resource Officer for Graham Corporation. 90 years ago, Graham Corporation was founded on engineering excellence, manufacturing expertise and the ability to solve some of the most complex and crazy industrial challenges in the world. Yet in many ways, Graham Corporation, we know today is still very young. While we carry a proud 90-year legacy, we are less than 5 years into the transformation of a reimagined company. And one that has expanded its capabilities, entered new markets and positioned itself in the center of extraordinary growth opportunities. Think about the environment we're operating in today. Defense spending continues to grow. The space economy is expanding rapidly. Energy infrastructure is evolving and modernizing around the globe. Demand across our markets are accelerating and customers are looking for trusted partners who can deliver quality, innovation and reliability at scale. This is where Graham stands today. What makes this moment so compelling is the combination of who we've always been and who were becoming. We have the ability and ambition of a company building towards the future paired with the expertise credibility and industrial strength that comes with 9 decades of execution. We know how to build. We know how to scale, and we know how to deliver. But opportunity alone doesn't guarantee success. Capturing this moment requires focus. It requires speed and it requires continual improvement. Most importantly, it requires us to ensure that our time, capital and talent are consistently directed towards the areas where they have the greatest impact. At the same time, we're navigating significant organizational evolution. Our internal transformation is occurring alongside historic market growth. That means building the culture, systems, process, and leadership capabilities necessary to meet increasing demand while maintaining the quality and execution that our customers expect. Today's meeting is about aligning around that mission. It's about understanding where we're heading, hearing directly from our customers, discussing our strategic priorities and ensuring that every part of our organization is prepared to contribute to Graham's next chapter of growth. I believe we have the people, the capabilities and the determination to seize this moment. Thank you for being here, and thank you for your commitment to Graham Corporation. During today's presentation and discussions, including the question-and-answer session, we may make forward-looking statements regarding future events, performance and business expectations. These statements are subject to risks and uncertainties that could cause actual results to differ from those discussed today. Additional information regarding these risks can be found on our SEC filings and other public disclosures. We may also reference certain non-GAAP financial measures and key performance indicators throughout today's presentations. Related disclosures are included in the presentation materials for your reference. Let's get started. I'll hand it over to Matt Malone.

Good morning, everyone, and thank you for joining us on this day where the Knicks are out there celebrating. So I think everyone in the audience at this point knows who I am, but Matt Malone, President and CEO at Graham, what a pleasure and an honor to be in front of you to talk to where we're headed. First, I want to start with a few key messages. The first one is Graham is built on credibility through action. Over the last 4 years, we have come together as an organization and delivered on every expectation that we set for our shareholders. Second, Graham has an incredible industrial fabric that's been built over the last 90 years, and we're using that as we move forward is the foundation that we're building upon for the future. What we're going to talk a lot about today is the improved the growth phase, and they're specifically connected in terminology because we're focused on improving and delivering on the investments that we've made over the last 4 years, as well as laying the next foundation for the growth phase that we're going to move into. The second, we have been investing in our people, tools and processes to enable ourselves to align with quite a few market tailwinds that we're seeing in our business units. So when we talk about that, we talk about defense, space, energy and process small modular as a subsection of energy in process. These end markets have incredible tailwinds. But the technology and the competencies that we're developing in Graham are actually market agnostic and can be used as we move forward in any industry. The next, I mentioned, credibility through action. We've been driving strong financial performance, including cash generation, disciplined capital allocation. Chris Thome will give you the speech later today, but we are incredibly responsible with the capital that we deploy in this business. And we do that with a very concrete plan, and we stick to that plan, and that's how we're able to deliver. With that, Graham at a glance. Well, we're an evolving company. And so you're going to see that our sort of tagline changes over time. And what's important in today's conversation is we're committed to delivering mission-critical equipment, to our end users every single day. That mission-critical equipment is surrounding two key areas. And the two key areas are small, compact, highly efficient, and really focused around size, weight and power optimization, which we'll talk a lot about today. With that, while our technology and our competencies are market agnostic, we are serving today defense, space and energy and process with the majority of our business. Graham was founded in 1936, 90 years of success here. But it's come to life with our 750 employees that are dedicated every day and treat this corporation like their entrepreneurs. And so what you'll see in Graham is employee base that is 100% feeling like they own the company, and I hope from the leadership team today, you feel that. Market cap growing. Obviously, it's been a great journey over the last 4 years. We've seen roughly 20% CAGR. It's an aggressive clip, but we are excited about where we're headed, and we feel like that momentum can carry forward. For those that don't know, Graham, we have a global landscape, actually $1 billion of installed base over the last 9 years globally. And we have offices in -- two offices in Colorado with the FlackTek business and Barber-Nichols. We have a satellite campus of Barber-Nichols in Jupiter, Florida, Upstate New York and Batavia is where the headquarters is, and Graham was founded. And then we have two satellite locations internationally in China and India. With that, in order to understand what we're going, you have to understand where we've come from. So Graham, the nice thing is, is we're accelerating from a position of strength, but we have to go through a quite long stabilized phase. Before we get into that, though, I just want to talk through how we've gotten here. So as you cycle back to Graham from 1938 until the early 2000s, highly cyclical, process business, oil and gas, up and down, extract value in the highs and survive during the lows. In the early 2000s, Graham leadership decided to diversify into defense, which is where the condenser business for the undersea platform came into life. And at that time, Graham started using the vacuum and heat transfer capability in a new market, which was defense, perfect timing for the upswing that we've had recently. In 2018, Graham started courting Barber-Nichols. And in 2021, completed a transaction that was transformational for the corporation. With that transaction came leadership, came a spirit of innovation and became a much stronger position in the defense portfolio that we talk about today. We then moved into the last 4 years. It hasn't been the easiest journey. Day 1 after the acquisition, we were talking about cash conservation. We had lost $10 million as a result of further investing in the defense business, and that has served us so well over the last 4. The commitment to those industries has been shown to our customers and they believe in us. With that being said, the stabilized phase has mentioned has not been easy, but we've laid the fabric for the future as we go forward. And I'm happy to report today the stabilized phase is behind us, and we're healthily in the improving growth phase. So I'm going to talk today a lot about the improved phase and then we're going to lay the foundation for where we're headed in the growth phase. With that, we've shown this slide quite a bit before, but I have some highlights that I want to bring to mention to the team. So the first is in the defense side of the business, 60% of the portfolio today. So we've really diversified into that. The majority of that business is focused around aircraft carriers and nuclear submarines. With that, inside of submarines, just think the main nuclear power plant on board the submarine, which is the differentiating capability in the nuclear sub. Graham provides the main condenser which is what thermally regulates the nuclear power plant, absolutely critical for those assets. In addition, we provide nuclear cooling equipment for some of the electronics, and we also provide the air turbine pump in the front of the asset, which is what actually rejects the torpedo from the submarine. Recently, and I'm happy to share, we were announced that we won a $22 million PO, and that PO is [ undefinitized ] at this time, but it allows us additional key content on the Virginia-class submarine that we have not been able to announce to date. It complements our capability that we have in heat transfer and vacuum technology and we believe the slide that we've been showing on the nuclear naval submarine, we actually add additional content as we move forward. To date, this has been sole sourced with a single vendor and now Graham is competitively positioned. What I'm most proud of is not the award. It's how we got the award. We have delivered on our commitments. We have made commitment to the Navy, and we will continue to use -- we will continue to deliver and invest in that asset. With that, torpedoes a natural extension. The Barber-Nichols Business has been doing this since 1966 very well, and Graham is now using the technology in torpedoes in the [ UUV ] space. In addition, we talk about directed energy lasers and we talk about radar platforms. We're using an agnostic technology that can apply between those two businesses and one of our leaders will go through that with you. In space, it's 6% of our business, but we see tremendous amount of growth. We'll talk about that in our order segment. Everyone says, why is revenue flat? Well, orders are not and we see that launch cadence is increasing pretty rapidly. So we'll talk through that. Energy and process backbone of gram. We've been doing it for 90 years. We have credibility and missions over those 90 years, and we're using that same technology to leverage in cooling for data centers, and we're also bringing small modular nuclear reactors to life that will act as key enablers as we diversify the energy segment. Looking at why we win. Graham wins for many reasons, but I'll go through a few today. We win because we have strong technical expertise that's been rooted over the last 90 years. We have tool sets. We have IP protected technology that we apply in the critical end markets where niche knowledge is critical. And then we bring into that system knowledge where we understand the ecosystem, which I'll talk to later. Second, you're actually going to hear from some of our customers today. Our customers, they are long-standing, many of which didn't come yesterday, two of them you're going to hear from today over decades of experience with. And these -- all of our business today [ are pick up the phone ]. So our business is an incoming sales. We're going to talk about outgoing sales today as well, but you only establish new work is if you deliver on the work that you've already committed to. Full life cycle, we want to be able to deliver solutions from the beginning at concept through the end, which is delivery. And then, oh, by the way, that asset must work for years and sometimes decades. And we're going to support that equipment and make sure that our customers know how important we are to them. The last is you're going to hear from 15 leaders today. These 15 leaders as well as every employee 750 are growth oriented with the spirit of continuous improvement and always have the most integrity. So introducing the 3-year targets. I don't want to sound like a broken record, but the story is going to continue on. We're going to continue with focus on 8% to 10% organic investment -- organic growth. And what I'll say is where we have opportunity to accelerate, we're going to continue to do that. We're going to continue our journey on incremental margin expansion. And we've been talking to date about let's get in line with our peers. At the next phase, we're going to start, how do we start advance to the top quartile within our peer group. We talk about ROIC. So to date, you've seen 20% ROIC. The reality is we are going to continue to do investments that are greater than 20% ROIC. But when I say 14%, that's at the aggregated corporate level. So every project that goes through Chris, and I assure you that Chris is going to watch this very closely, we'll go through with the continued scrutiny that we've had to date. And then in addition, we have not built in M&A, but we're going to continue to be very selective and ensure that these M&A opportunities are accretive to our long-term strategy. With that, today's presentation, A lot of the folks in the audience and on the webcast have met Chris and I. The reality is this corporation is way stronger than the two of us. And so today, you're going to hear from the leaders that bring this vision to life every day. We have diverse experience. We have a growth mindset. We treat it like entrepreneurs and everyone you're going to hear from today, cares. We care about listening to our people. And as a result, people say, where do 20% ROIC opportunities come from every day? If you just listen to your employees, you'd be amazed at what you can learn. In addition, we have our Chairman of the Board, Jon Painter, in the audience, and we have a Board that's ready to support our growth path. So with that, I'm going to introduce [ Mike Dixon ], and while I do that, I do want to let the audience know, we have the opportunity because of the [ Knicks ] declined, but we're going to actually have the opportunity to ring the bell. So the folks in the room at 9:10, we're actually going to step out for a little bit. you all can come down to the floor, so we're going to escort down. We'll repick up at 9:45 and then we'll continue on. We have a pretty succinct agenda so we still will finish on time. So we're going to get through defense and then we'll move down that path. So Mike runs the Barber-Nichols business. He's done an absolutely fantastic job and excited to have you talk about defense.

Thanks, Matt. And thanks for everybody listening online for taking time today, and thank you, especially to everybody here in the room who fought the crowds on such a historic day for the city of New York. I appreciate you taking the time. As Matt said, my name is [ Mike Dixon ]. I'm the General Manager of the Barber-Nichols business unit within Graham based out of [ Vada ], Colorado and really excited to talk to you all about our defense business and extremely proud to represent Barber-Nichols here today. Some of the key messages I hope everybody takes away from our talk here today. Graham's defense business is built around a pretty simple strategy. Secure positions on the most critical long-cycle defense platforms and then leverage those positions to drive decades of growth, recurring revenue and new technology insertion opportunities. Global security concerns are driving record spending and budgets within the defense sector. And Barber-Nichols as well as the greater Graham Corporation is proud to support the mission of the warfighter and protecting the freedom for each and every one of us. Over the last 5 years, Graham's defense revenue has grown from approximately $62 million to $147 million, representing a 24% CAGR. That growth is not the result of short-term program wins. It's the result of being deeply embedded on strategic platforms that the U.S. and their allies will be funding for decades. Today, Graham's defense backlog provides a stable foundation and it's supporting some of the most important defense platforms in the world, including the Ford-class aircraft carriers, Virginia, Ohio and Columbia-class submarines. Torpedo systems, advanced radar systems, directed energy applications as well as many, many others. What this stable backlog allows for us is perspective into the future, and allows us to deploy our capital very strategically to ensure that the growth that we're experiencing today is sustainable for years to come. What makes positions like ours, particularly valuable is that more than 80% of our defense revenue is sole-sourced or it's supported by substantial competitive advantages. So once our systems are qualified and integrated, replacing them becomes extremely difficult, due to performance requirements, qualification costs and program risks if we were to be replaced. As a result, investors should think about our defense business as a portfolio of long duration infrastructure-like assets embedded within national security programs and priorities. The next question investors often ask is what exactly are we supplying on these platforms? And Matt had an opportunity to introduce some when he spoke. But one thing I want to emphasize is Graham is not providing commodity hardware. We provide mission-critical systems that enable propulsion, power generation, thermal management and most importantly, survivability. Our capabilities within the corporation have been enhanced by grants from our customers of over $29 million. I personally believe that these grants demonstrate the belief of our Navy and defense customers in Graham Corporation, but most -- and just as importantly, they need our products and our technology to be successful and to be safe. On submarines, our equipment includes the main condensers, as Matt mentioned, within the engine room. We make torpedo ejection pump systems that inject torpedoes from the submarine and exist on the pressure boundary, which is a critical component to ensuring that all sailors on that submarine return home safely. Overall, our systems are essential to vessel operation. On aircraft carriers, we provide critical heat transfer and fluid management systems, such as the propulsion plant freshwater heat exchangers. We're increasingly applying our core competencies in high-speed turn machinery, power dense motors, controls and thermal management into emerging defense priorities such as advanced torpedo propulsion. Outside of naval platforms, we're applying that same technology to cooling systems for next-generation radar and directed energy weapons, advanced power management solutions and modular nuclear factors that can be deployed on the battlefield. The common thread across all these markets is that increasing power density creates increasing thermal management load. And managing that heat effectively is becoming a strategic requirement across defense systems, and that's exactly where Graham excels. If there's one slide investors should remember from today's presentation, I personally believe it's this one. Navy shipbuilding plans provide extraordinary visibility into future demand. And based on publicly available projections, the platform shown here represent approximately $1.8 billion in revenue opportunity through 2056. These are not speculative programs. These are platforms that are under construction, in service, already funded and central to the United States national security strategy. What that -- what makes this opportunity unique is that we're already embedded on these programs today. We aren't trying to win our way on. We're executing on them each and every day we show up to work. Recent examples demonstrate how strong execution creates additional opportunity. And Matt already had the opportunity to mention that Graham's existing component work on Columbia-class submarines recently enabled us to secure similar work on Virginia-class subs for orders for the next two boats already placed. Expanding our content position on one of the Navy's most important submarine programs will ensure that the growth projections that we have continue on into the future. At the same time, renewed investments in areas like Torpedo electrification is creating entirely new opportunities that leverage decades of experience in power dense motors, controls and propulsion systems. These are just a couple of examples where Gram performance and execution continues to enable growth into the next generation programs of the future. So while this slide shows approximately $1.8 billion of opportunity, we believe it understates the future content growth potential. This next slide is a nice little summary that illustrates how Graham converts engineering differentiation into shareholder value. Modern Defense Systems, as I mentioned previously, are becoming dramatically more power dense and generating significantly more thermal load. In this example here, the transition from unidirectional legacy radar systems to 360-degree actively scanned array radars, significantly increase their capability. But as I mentioned, it significantly -- also significantly increased the thermal load generated. Managing thermal loads in a mobile battlefield environment require solutions that are smaller, lighter, more efficient and more reliable than commercial alternatives. Earlier, Matt mentioned size, weight and power. I'll add to that Cost and that's an most commonly known as [ SWaPC ], and that is where Graham particularly excels. Our radar cooling pump achieves roughly half the weight and approximately 60% of the volume of comparable industrial solutions while delivering the required battlefield performance in terms of flow, pressure and environmental survivability. The important point for investors is, frankly, it's not the pump itself. The important point is that the same technology architecture can be leveraged across multiple future applications, including other radar systems, directed energy weapons, advanced airborne platforms and other advanced thermal management needs where SWaPC is paramount. This is how we create growth beyond our traditional naval business by taking proven core technologies and applying them to emerging defense priorities. We see three primary drivers of long-term growth within Graham Corporation. First, we're going to continue expanding content on strategic naval platforms where we already possess strong positions, while scaling manufacturing capacity to support that increasing demand. Second, we apply our core competencies to emerging defense priorities and undersea warfare, hypersonics, directed energy, radar, national security and space and energy resilience initiatives. And third, as we grow our installed base, and expand our life cycle support, sustainment, overhaul and spare parts revenue to ensure that the products that we feel are supported and working as intended for years to come. As more systems transition from development to production, it creates decades of recurring aftermarket opportunity for the corporation. Before I leave the stage here, I'd like to leave you with four reasons Graham is uniquely positioned to continue creating value. Number one, we're entrenched on the most strategic naval platforms in the world, providing decades of visibility and stability. Number two, we possess differentiated technology in Turbomachinery, cryogenics, thermal management, power generation, motors and fluid systems that are increasingly relevant to future defense requirements. Number three, we've invested in highly specialized manufacturing infrastructure with capabilities that very few others have. We've invested in workforce development to ensure that we have a pipeline of talent that's able to support our growth as we continue forward. And we have quality systems and other processes that create substantial barriers to entry for other competitors. And number four, and perhaps the most importantly, we occupy a unique position in the defense industrial base. We combine the technical sophistication typically associated with large prime contractors with the speed agility and responsiveness of a mid-tier supplier. When you put all this together, long-cycle platforms, sole-source positions, differentiated technology, visible backlog and multiple pathways for future growth, we believe Graham is exceptionally well positioned to benefit from increasing defense investment for many years to come. Thank you very much for your time today.

So with that, we're going to take a little bit of time to go ring the bell. For the folks that are here visiting, you're going to go down with [ ICR ] team down to the floor or you can stay here and work. At 9:45, we're going to come back together. And will get restarted. Next up is going to be Charlie with space, and then we'll go through right after Charlie with energy and process, and then we'll move to FlackTek great detail. So appreciate you understanding the opportunity to ring the bell this morning. I know for the folks that traveled down here, that is not why you're here. What I will say is we'll be good stewards of your time today. So we'll pick back up at 9:45. [Break]

Welcome back. Really cool experience. I appreciate -- it must be a little disruptive there and going down a ringing the bell, great opportunity, pretty grateful for it. I'm [ Charlie Straker ], Engineering Director Barber-Nichols, subsidiary of Graham based out of Colorado. Talk a little bit about space. The next frontier, the last frontier is my kids like to say, to infinity and beyond. To me, it's the now frontier. And if you just look at the number of launches that are happening, I mean it's almost globally on a day in the last year. It's increased almost 7x in the last -- within the last 10 years or so. I mean it's pretty wild. And with that, there's a lot of opportunity. So excited for what Graham has ahead of us here in the space market. So let's jump into it. Today, Graham is a Turbomachinery provider for a lot of different space product. From fluid pumps to cryogenic pumps, to rocket turbo pumps and all of them mission-critical applications. And with that, need to be reliable, must be safe, must meet performance and have the quality. And we've demonstrated that, and we've proven that our customer is trusting us for that. And the fact we've got product there, it's enabling us to get on other applications as we look forward and as expands in this space. We're serving everything from launch vehicles to various payloads, be it satellites, astronauts, backpacks, lunar development, deep mission, interplanetary missions, so a wide broth of applications. And as the commercialization continues to expand. There's going to be additional applications, talk about data centers and space. They're going to require cooling, and those are applications that we can serve. Furthermore, it's rapidly developing. These are things where you need to move with the pace because it's a competitive market now. These aren't NASA programs. So we have to move fast to win with our customers so that they can win. And we have the product that we can iterate off of to enable that. And I think when you put all those together, we're starting to see a story here where the orders are increasing year-over-year and a 70% increase just from FY '25 to FY '26 so momentum is building here and it's really exciting. If I get a little deeper here on just what are some of the products that Graham is providing today. I'll start with launch vehicles, rocket engine turbo pumps. We actually have an example model on the back table and I encourage you to go check it out and play with it. These are complicated machines, and they're at the heart of the rocket. It's what's delivering the fuel to the rocket the propellant, if you will. These things run at 30,000 RPMs and faster, 10,000 horsepower machines, they're mission-critical. Without them, you don't get lift. Cryogens, if you look at the propellant, if you were going to have a gaseous propellant, the tank sizes would be impractical for a rocket, right? So you need to cool those down to cryogenic states. We're talking minus 400 degrees Fahrenheit. Very, very cold. You have to manage that propelling by recirculating it to keep temperatures similar throughout the system. Without that, you risk rupture failures, tank failures, vapor lock that prevents fluid from moving to the engine. Again, mission-critical component. Thirdly, thrust vector control. These are what steer the rocket. So ultimately, you have to maintain a hydraulic pressure so that those rocket engines can [ gibble ] in order for the rocket to meet the trajectory that needs for the mission it's fulfilling. So another mission-critical component. If I move to the payload side of things, we're serving large satellites that require active cooling. As you add more computational load on these satellites, you need to cool those electronics. And you have to do that through active cooling, where you're moving fluid through the electronics, pulling that heat out and rejecting it. We have product currently on satellites today that are providing cooling, and that's going to continue to expand in the market. And lastly, my favorite, we have the oxygen fan blower on the next-gen space suit, talk about mission-critical. So our customers, they trust us because we've demonstrated it, and as we move forward and as more applications, they're going to come to us for solutions because we've demonstrated in these mission-critical applications. We get a little bit deeper here, let's talk cryogenics. Graham has been doing cryogenics for almost 50 years for various applications for ground base as well as space, for synchrotrons, superconducting magnets, hydrogen mobility, the list goes on. And if you look at space, anything that's going to require moving in space is going to require a propeller. And that's going to be a cryogen, and those are things that you're going to need those recirculation pumps. You're going to need transfer pumps, things of that nature. As you talk tug vehicles to move satellites between orbits, refilling and satellites. Refilling -- refueling in space. Those are things that are on the horizon, and we're ready to serve those markets. If you look at just the propulsion market alone, $30 billion by 2030. That's pretty substantial, and we're ready to capitalize on that. And why? Mike mentioned it earlier, the swap acronym. We specialize in power dense machines, size, matters in space, weight, definitely matters in the space when you're talking payload mass and performance power. And the way we do that is we speed up our machines. And to do that, you got to have bearing solutions that can accommodate that, we're talking about cryogenic cold fluids. You need to keep the heat away from that fluid from what the motor produces and so forth. And we have thermal isolation solutions that we have honed and involved over the years to accommodate that. I think it's demonstrated, if you look at a couple of the opportunities that we're moving into low rate production, long-cycle opportunities. For example, the upper stage cryogenic pump for launch vehicles, lunar landers. So these are starting to pick up momentum and have long tailwinds behind them, and we're excited about the opportunities coming. If we look growth, and you'll see a common theme here we're sticking to our core. It's what differentiates us. That's high-speed turbo machinery, cryogenics and the power electronics to drive that. Those are things we're going to continue to mature our technology. We continue to grow we're going to use that through testing. And we've got some world-class test facilities. We just put down a [ propellent ] and test facility down in Florida that, quite frankly, no one else in the world really has and can really demonstrate testing our product so we can test and learn to fail fast, but also we can test with our customers. So we can collaborate with them so that we can deliver a solution that meets the mission. As we look into the increasing content platform, we're in discussions today on launch vehicles for next-gen satellite platforms for next-gen actively today with customers. There's a lot of activity here. We're also going to continue to look where we can provide more than just the components but full systems, where can we add additional service to a customer where they don't have to do the integration work. We did on the back table, there's another example of that, where it's not just a turbo machinery, it's the motor. It's the power electronics that drive it. It's the heat exchanger, the full system, if you will, so that our customers can focus on their mission and we can provide more value to them. And lastly, I mentioned earlier, [ pace ], these are not bespoke designs anywhere. These are not 3-, 5-, 10-year NASA development programs. Customers need solutions now. It is becoming a competitive market, and we're ready to move pace with them, and we're going to continue to focus in areas where we can add velocity through our supply chain. We can enhance our engineering processes even faster, again, adding more test capabilities so we can learn fast. And last, I'll leave with just why is Graham uniquely positioned to win? And if I were to summarize, we've got the technology. It's there. We've proven it. Our customers trust us, we've delivered on it. We've got the test facilities that others don't have to further our technology and our customers' technology. And lastly, as the sector grows -- as these launch vehicles, we've got more launches going on, more applications going in the space such as your data centers and so forth. We're positioned because our technology is agnostic of the application. Anyone that needs [ propellent ], anyone that is cryogen, we're going to be able to serve that. And that's going to be a wide variety of applications that are going to be launched in the space in the near future. So I'm really excited about what we got in front of us. It's been a just a wild ride when you look at space over the last decade, and there's a lot of room in front of us. We are ready, and we're positioned, we're ready to go execute and really nail it. So I'm excited about it. We've got a great team and really looking forward to the opportunity. So thank you. I'd like to introduce [ Will Zinda ], our General Manager, Graham Manufacturing, talk about Energy and Process.

So it was amazing. He got my name right on the first try. So my name is [ Will Zinda ]. I am the General Manager of Graham manufacturing. We are the facility or the business that's based up in [ Batavia ], New York. I think when you think of Graham, this is really the legacy of what Graham name stands for Energy and Process. This is the business we've been in for 90 years. It's the business that we've grown on, and it's the business that, as Matt mentioned, is the backbone of Graham. So let me talk a little bit about some of the key messages I want to share. Number one, we are mission critical. We go into installations that are hundreds of millions of dollars, and our part has to work the first time, and we do that every time. We are leveraging R&D to drive efficiencies. So that's what our value proposition is to our customers. And I'll spend a little bit more time on that and how we do that and then how we're going to take that and be able to use it to grow the business as we move forward. But we are leveraging R&D right now smartly, putting the investment dollars in and making sure that we evolve the business so that we're ready for future markets. We're transforming our aftermarket. So we've been very reactive. And again, I'm going to spend more time on this later today, but we wait for people to call us on the phone. And then we pick up the phone and we say, "What do you need?" We don't go out to them, and we don't go obtain that work that's out there for us. We're going to go change that model, and we're in the process of doing that right now. And I think the most important thing is our core competencies go across diverse markets. And you'll hear that message across a lot of the businesses that we talk about today. We can -- we've been in the refining and the pet chem for a very long time. But there's other markets that we play in that give us the ability to say, okay, if one is down, we have the ability to be able to leverage that other market and stay as a healthy business. And you'll see some of the areas that we're going to be utilizing for growth like geothermal, nuclear and hydrogen. So that's kind of a segue into this slide here. And we are versatile and a lot of our technology and our information is proprietary. So when you have 90 years of proprietary information, it gives you an advantage over your competitors, which we utilize on a daily basis. Our technology is an enabling technology for the global energy demand. So I'm going to spend some more time on nuclear here in a couple of minutes. But we know with the AI infrastructure and some of the data centers that are going to be coming out there, this is going to be a big, big ask for the marketplace, and we're ready to enable that. And then there's a stable demand in the oil and gas industry. So we're not going to give up on our legacy business. We're going to continue to support it, and we will be a premier supplier. So I think the best way to illustrate that is the pictures that are over to the left-hand side of the slide, your right. When you take a look at the top, that is an oil refinery, that big column in the middle there is a vacuum distillation unit. That is our historical business. What we provide is vacuum and heat transfer technology in that unit. And that allows our customers to gain more yield out of a barrel of oil because of the efficiencies they gain that we provide with that technology. The middle is a tanker truck that's transporting hydrogen. That is a cryogenic pump that is produced at Barber-Nichols. So Mike's business out in Nevada. And we do the pumping for loading that and also unloading that. So without that technology, you couldn't do that, and we're ready for the hydrogen economy when that comes back. And then I think the bottom one is probably the most exciting. It's a micro reactor. So this is going to be a game changer for forward deployment of power, whether it be portable or whether it be in installations in areas where you normally couldn't put power generation. Again, out in the Arvada facility, Helium circulators, which regulate the there in the reaction process and then supercritical CO2 Turbomachinery, which drive the power that come out of that unit. So again, very critical. And I think that's a really good segue to the next slide. So we're really excited about this because our technology transfers very well into this marketplace. So we're very much focused on SMRs moving forward. As I mentioned, we know power generation and power density is going to outweigh what we can currently produce as a country and as a globe. That's going to be -- that's a fact, and that's the way that the market is going to be. So a lot of what's happening now is how do we find energy sources beyond our fossil fuels and beyond the green technologies that have been developed that will be able to serve those marketplaces. Nuclear is definitely going to be the answer. That is a fact at this point. And so we have product that spans all the way from the micro reactors that I showed all the way up to gig. As a matter of fact, a lot of people don't know this, but Graham has been involved in the nuclear industry since 1966. So we have over 150 million installations on refineries right -- on nuclear reactors that are out there today. And one of the focus is that we're going to be really keying in on is SMRs. There's over 80 active designs on small modular reactors today. That's a huge, huge marketplace and a huge opportunity. Our vacuum systems, our heat exchangers and our turbomachinery all can be enablers and be accretive to that marketplace. And if you take a look at what the market shows, our obtainable market for a 1 gigawatt plant, which is your large nuclear reactors, the traditional nuclear reactors, $15 million to $30 million per reactor worth of products. And if you take a look at the serviceable obtainable market for a 300-megawatt SMR, somewhere between $5 million and $15 million. So we're uniquely positioned with our technology to go drive growth into the business and also enable our customers to be able to put this technology out there and be able to generate the energy that we know we're going to need moving forward. So how are we going to grow? We're going to continue to grow off our strong core. So we do not abandon our core business. Oil and gas, the traditional refinery. This is an area where we're going to leverage -- continue to leverage vacuum, continue to leverage our heat transfer technology, and we're also going to make sure we're supporting our customers on the service side. And how are we doing that? We're investing capital in the business. And you'll see examples of that a little bit later on in the presentation. and we're improving our responsiveness by investing in systems, so upgraded ERP systems, AI applications, which we're developing today, which will be enablers moving forward. We're going to continue and increase our content on next-gen platforms. So for us, that's nuclear geothermal, those type of applications. I spent some time on that in the next -- on the last slide. We will leverage the technologies that we've developed over the 90 years. We will continue to evolve those so that we gain more efficiency, and we will apply to those technologies so that we have growth capability many years beyond today. And then the last one is we will accelerate our aftermarket. So again, we were very reactive in the past. We are going to be very proactive. And we will do that through AI-enabled tools. We have data sets that go back many years that we know where all of our installations are. So we're going to go out and we're going to make sure we pick up the phone first, and we get that work from the customer, and they know we're there to support us. And that will be the three growth enablers that we have. So why are we uniquely positioned to win in this portion of the industry. Number one, we are a one-stop solution provider. And so again, when you think about Graham and how long we've been around, we have 90 years of experience. We start with initial concept, and we go all the way through the end of life for an asset and then replacement of that asset. And we do everything in between that from service to engineering to maintenance and parts. And we will continue to do that. The second thing is we have decades of proprietary application knowledge. What does that mean? All of the data that we've gotten on how do we apply our technology to our customers' needs and create value and efficiency for that customer, we've captured that. And again, we utilize that on everything that comes into us from a customer [ RFQ ] or need. We're going to have a strong pull-through on opportunity. As Matt mentioned, we have a $1 billion installed base, $1 billion, that is the installed base that we can go and service in a very, very highly profitable aftermarket environment. Our business model is resilient because we've diversified. So we're not -- we don't cycle like we used to with one segment but it gives us the ability to invest as a business. And then when there's an upswing in that particular segment, we are ready and able to take advantage of it. And then lastly, our process systems and intelligence, we are intimate with our customers as far as their processes. And that allows us to drive value. And what I like to tell people about our businesses, we've been winning for 90 years. And because of this, we're going to continue to win for 90 more years. Thank you. All right. I will introduce Matt Gross, really exciting addition to the corporation talk about FlackTek.

Really excited to be here chatting with you all today. My hope is that you get to fully understand our technology. It's definitely a niche technology with massive impact. So I hope that you can see the synergy that we have with Graham and the impact that we have in the market going forward. So pre January of this year, I was the co-founder and an owner of FlackTek, and we were looking for a growth partner. And today, as of today, I'm the GM of this new business unit of Graham representing this new disruptive technology. And we already have some close or near-term wins that happened in early in this year. So my goal of choosing Graham and as part of this acquisition was, I believe that they could help with speed, speed to market, speed to commercialization and scale commercialization and super excited to announce that we've already achieved some of those wins early on. So with that -- where do you find FlackTek? You're not going to find us on system. So when I say own system, I'm talking satellite thermal protection system, rocket motors, you're not going to see our technology on systems. We're behind the systems. So when I say behind the systems, think of like a [ CNC ] machine that's tooling up aluminum or steel cutting a part that then ends up on the satellite. We're in the same way, but for liquids, semi-solids and paste. So a lot of people don't fully understand the ecosystem that exists in this nonsolid world. There's just as critical pathways for processing and materials development and these liquid solids -- or sorry, in semisolids that there are in the metals and [ CNC ]. So much like a C&C, the mills of yesteryear that were manual that you had to set up manually and run manually until the CNC came in that allowed for automation. We're the same style technology for bladed machines to bladeless machines. And what I mean by that is if you're operating a bladed machine, you're typically having manpower over the bull, doing scraping, working with the material, you can't automate that process. It's very limited by the interaction, the human to do. And with FlackTek, we're disruptive because we completely removed human from that equation, and we fully can process the material with no interaction whatsoever. And that enables automation repeatability, reliability of the product that comes out of there. And because of mixing as, call it, a nebulous application, we're market-agnostic. We literally sold to over 40 different market segments last year. Of course, aerospace, the defense chemicals industry, but we're in biomedical, pharmaceutical and many industries ranging from that. We've also got a really deep customer base we built some great logos over there with the ability to continue to work deeper with those customers as well as to expand them into our other product lines. So moving on, look at a bit how our technology actually works, I want to take some time to go over this slide so that you can actually see how the technology works. Okay. So bottom right-hand corner of the screen, you're going to see two motions, two arrows, there is a demo in the back of the room. So those of you that are in person, stop by, we got a mini version of this. But the arm spinning in two directions. We call this a dual asymmetric centrifuge. So when you think of a typical centrifuge, you think of spinning in one motion, we do spend one motion. But as we're spending in that singular motion, we actually rotate the cup counterclockwise. So in that graphic, you'll see a red arrow and then the blowers, they oppose each other, that action creates flow inside the cup. So bladed material moves blades through material, we move the material with a cup, no blades, so it's fully bladeless. Next, if you look above the graphic, you're going to see a robot integrated into one of our machines. This is a 20-kilo machine. It makes us in about a 5-gallon bucket and you're going to see a lid on the bucket and we're going to look down in, that's where the vacuum change will go in this system, but that bucket can be fully loaded with whatever material, thermal paste, rocket motor fuel, a cosmetic, a pharmaceutical, you name it, same machine agnostic industry, and it can be automated. And you can imagine, as we look over to the left side of the screen here that for a bladed machine is really difficult. You've got to be able to clean bowl afterwards. You've got much longer cycle times. We haven't even talked about speed. One of the more unique things about our technology is, I like to say that we turn every molecule into a blade. We're bladeless but we use the material in the cup as the blade itself. And because of that, we apply shear instantly everywhere in a container. So mixing processes that typically could take 2 to 16 hours, we can literally do in seconds to minutes. I'd like to say most people thinking hours when they think about their mixing process, and we can literally think in seconds. Typically also for bladed machines that are highly batched production, meaning like if you need to make 1,500 gallons or something because it's so hard to mix, you're going to make that 1,500 gallons at one time. in our technology because you can mix so efficiently and so repeatedly, you can cut that down and do a batch style production and still get the same throughput. Why that's impactful. If you think about a rocket motor production facility, they might require a 400-acre campus, to house their mixing equipment to health reduction equipment because they're mixing these large arduous batches at one time. We can do that same beta production and call it a few acres of space. So massive implications when shrinking the footprint of how we can impact the processing technology. And I'll touch again on the heavy skilled labor. Like when you set up these big mixers, they're not set it and forget it. You have skilled labors that work over these large mixers. So I'd like to say, the factory of the future isn't going to be built by people standing over mixing container scraping on the wall. The factor of the future is going to be built with automated bladeless mixing and we're leading that charge. Okay. So next, what's really unlocked growth for FlackTek is the picture on the bottom right there, our mega machine. So historically, for the last 15, 20 years, we were able to offer a small, medium, large equipment, which is the top right. That equipment is really great for specialty production, R&D, formulation, small-scale niche needs. But we were never able to follow our customer the wholly through full rate production. And what's changed now is we can hit for a production with a mega machine. We can do 12 -- 2,000 kilos an hour in our mega machine versus before we were stopped at that 5-gallon bucket size limitation. So this is really transformational for the business that we can follow the customer, the whole way from R&D through full formulation. I do want to point out, because we've worked so closely in lab scale -- the lab scale world, we have deep relationships with these customers because any product that ends up in production spend a lot of time in the R&D and formulation lab. And we've got really great lasting relationships with those folks. I will -- you've heard me say it a few times, but just like hit the nail on the head here, like our machine uses rotary technology, vacuum technology, thermal transfer technology, and it moves fluids. And we combine all those things, that's Graham. So it is a really unique fit that we can apply ourselves across all business units and all end customers. We even share a lot of the same customer base. So I'm going to go through a video here. This is the mega in action. Mega machine is the first of its kind, the largest and most sophisticated in the world by an order of magnitude. So we've produced this video with customer [ Andrel ]. It's fascinating for me to be here saying that we released this machine less than a year ago, and it is the centerpiece of [ Andrel's ] rocket motor production facility in Fort [ McHenry ] Mississippi. Their entire production facility operates with this machine as the centerpiece. So just some whiz-bang graphics here, the machine moving, that's 12,000 pounds of rotational mass spinning. Get you the feel of the machine and then onwards, there's a bit of an interview here. [Presentation]

They can say yourself all day long, but when you get your customer to sit down and say it to you, it's a pretty powerful thing. So really proud of that partnership with [ Andrel ], and there's definitely more to come with them. So what is our growth strategy? It's pretty simple. Three specifics here. We're going to double down on our installed base. We've got over 2,500 machines in the field already. So we can continue to win new customers as well as work with those existing customers. Middle part of this slide, it's effectively use our legacy installed customer base as a wedge into mega machine. So we have the world's deepest and greatest list of users of centrifugal mixers. And now we can simply re-approach them and figure out who are the ones that need to take their product into full rate production. It also in this middle section for mega, there's plenty of customers that never wanted to work with FlackTek because we didn't have scale. And the fact that we do have scale actually already opened stores that won't open yesteryear. And then finally, I haven't talked much about it, but we actually have a consumable ecosystem that lives with the machine. Every time you mix up the machine, one of the reasons you don't have to clean up afterwards. It's because you mix inside a disposable plastic container. We have a facility in South Carolina that owns the molds and does all the logistics of our containers all throughout the world. And we control -- we literally shipped over 3 million containers last year all around the world. So huge ecosystem built around container use. Also, service and reliability. The deeper we get into production with these customers the more they want us to support their equipment and the more they're willing to pay us to show up to be the white glove service that supports this niche equipment. So we've got a really deep lock in on that. So I think my entire presentation here sort of pointed to why we're positioned to win. We've got a unique moat around this from an IP perspective. Our customers are also locked in from the sense of if they've developed a process with our technology for a rocket motor system or for thermal protection shield, they call out our system and it's a really high switching cost to get out of that system so we're locked in with those customers. We've got some really cool things in the R&D and innovation pipeline coming with machine learning and actually being able to watch mixing and [indiscernible] mixing and proved capability is something mix. So I've been super passionate about FlackTek, my entire career, and I'm about 100x more excited for where we're headed in the future with this partnership with Graham. So thanks for listening.

Yes, and we're pretty versatile. And following on with Matt, one thing I just wanted to call out is we're really focused on the commercialization of the mega. It's actually Ted Hollywood, who's in the audience here, his sole job is to go sell the mega machine. And so we're surrounding with the capability and the credibility to go do that. So I'm excited to watch that product launch. This is actually one of the most impactful things for me. When you have customers that you've worked with for over 20 years on stage that can talk to why you're critical in their applications and the relationships that been formed. It shows the gravity of the criticality of the equipment, one. But two the long-standing partnership and the value that's been provided. Today, I'm so incredibly honored to welcome 2 long-standing customers, [ Tony and Royce ], these gentlemen have stood by gram for, like I said, decades, and they still do today. With that, Tony is a retired government prime contractor. He worked at [ Bechtel ] Plant Machinery, who has directly supported the U.S. Navy shipbuilding program for over 35 years. During his career at [ BPMI ], Tony managed overall activities related to the design, manufacturing and fleet support of various reactor power plants for the naval submarine programs. He worked on transfer equipment -- our heat transfer equipment for multiple submarine surface ship platforms. And today, Tony still consults in this area because he's so passionate about it. So Tony, thank you for joining us. Royce has 30 years of experience in conventional hydrocarbon and biofuels refining industry, spanning mass transfer, process design, simulation, desalting and water treatment. Royce is currently accrued, fractionalization and water treatment SME at [ Delek ] USA. Prior to this role, he was responsible for worldwide crude and vacuum unit technical support optimization and troubleshooting in addition to water treatment for a Fortune 50 multinational energy company and proudly got us degree at Nordea. We have another in the stands as well. With that, today, we're just going to have a quick Q&A. And I want them to share their experience, one with Graham, but more importantly, the criticality of the mission that they're providing. So gentlemen, thank you so much for joining us. They've traveled to be here today, and I'm grateful for that. So with that, I want to start off, so we're going to go back and forth. We've got five questions, so we'll keep it somewhat tight. The first section is really focused around customer mission and operating environment. So Tony, maybe we'll start off with you. Could you explain the criticality of your end application and how Graham equipment enables it?

Sure, absolutely. You heard over all the conversations, say, the term mission critical. Well, this is what it means to me, personnel safety, product assurance, operating reliability. I've been on submarines people are operating your equipment in an environment where, quite frankly, it's in harm's way. So the assurance that you have on meeting the requirements is paramount to their personal safety. Similarly, from a quality insurance standpoint, minor flaws or imperfections, quite frankly, can impact a mission-critical operation, i.e., noise, national frequency, submarines, one of the greatest benefit of it is obviously stealth. So having quality assurance is mission-critical. Lastly, operating reliability. The product lines that I've supported and from start to finish 30 years, up to 60 years of operating flawlessly. I've had the opportunity to talk to commanding officers on submarines, making split decisions on what to do on how to operate. They tell us they don't even hesitate to do what they have to do, knowing this equipment is going to meet its attendant purpose. And lastly, from a mission to critical standpoint, strategically, the U.S. Navy is allowed to port across the world, they're parking nuclear reactor power plants in Japan, U.K., Australia. Having, a flaw, an issue or an event, that would not happen. And quite frankly, an event like that would be worldwide news. So that quality culture, that's what Matt and his team have ingrained at Graham from -- this level of people today to cry frankly, my interactions with the shop floor. That all being said, quality is nothing. You don't deliver on time and affordable. And that's what make Graham, I think, unique and special to support the mission that I supported for over 35 years.

Thank you, Tony. Really good insight. And before Royce goes, one of the things I want to share with Royce is if you have a process question with anything to do with vacuum, this gentleman has solved some of the hardest vacuum challenges in any refinery around the world. So we're not just talking to a guy that's sort of done this once or twice. He's kind of the go-to guy in the business if you have an issue. So with that, could you also describe the mission criticality of your equipment? .

Yes. True Matt. So at the heart of the -- or the refining industry is our crude unit, which is the first unit that processes the crude oil, and the highest value uplift you see in a refinery is between the residue, which is the heaviest component that comes to make -- that makes asphalt and in your distillate -- your clean gasoline diesel jet fuel. And so the criticality of the Graham equipment is that they make the vacuum injectors that they showed previously, you saw the big giant vacuum tower. And so the big giant vacuum injectors are again critical to the profitability of refinery into the smooth operation of the refinery. And they don't actually have any moving parts, they just work on steam. Steam is to provide the energy to make it work. So they're very unique design and Graham has a special know-how to design them for very large systems. And all the major oil companies will have Graham equipment in their refinery, and they've been a partner with myself for the last 25 years designing and I've done almost 10 different revamps with them and new design. So they've been a very trusted partner.

Yes. Thank you for that. So the next up, I'd love to go into a little bit more detail about that. We've talked a little bit high level about why Graham, but maybe more, what's been your experience with Graham just in sort of the working relationship. And then what's differentiated more -- maybe a little bit more detail of that experience?

I'll start. Thank you. From a working relationship standpoint, I've kind of uniquely I've been your customer. And quite frankly, since I retired, I've been their supplier. And one of the reasons why continue this relationship after I retired is the reason why Graham is, I think, here today. So transparency, when I first started working with Graham, we've always had issues. We've always want to do things faster, better. And that was kind of that -- my role working with Graham. So we quickly realized that to do that, we got to be transparent. And we had to put our cards on the table, make those tough decisions, which, quite frankly, from a customer supplier relationships, sometimes is difficult. Well, they embraced that and made these challenges that we had, I'll say, a lot more palatable where we can get through them and both serve each other's other needs. But the biggest thing from Graham, how you enable what we did a BPMI we're doing today is you heard that you see and feel the technical expertise A lot of organizations have that. What it Graham is different. They're not technically arrogant. And the differentiator to me is they're open, willing and embrace people coming in and providing different opinions, different views and accelerating and elevating those tough technical decisions. And what that does is twofold in my opinion, Matt, I hope you agree, is one makes the right technical decision because, again, we have to do that based on the reasons we just talked about, but makes that decision faster and you heard speed to market. That is one of the ways that they have allowed that one in our relationship. But lastly, I think what makes enables Graham to do this type of work is empowerment. I've seen it working with Matt and his team. I've seen it on our projects that we're working on past and present, you empower people to own the solution provide them the support and resources. And lastly, excuse me, is the proper level of oversight or governance to make sure it's done right. So I always follow the philosophy of plan, do, check, act, right? That's how Gram approaches their business.

Yes. It's really good insight. And with everything going on that empowerment is so critical, people ask like how do you have this much stuff going on? And it's a really deep planning phase that then we allow people to go execute. So I appreciate that perspective. And Royce for you, I mean, just a little bit of an overview of maybe a specific sort of example or whatever is on your mind.

Yes, absolutely. The word that comes to mind from me with the Graham is continuity and stability. For instance, I'm still working with the same salesperson that I did when I started out working with Graham in 2004. So he's selling a play of Graham, still a trusted friend and trusted partner. When I started out as my first design in 2004, I didn't know how to design vacuum systems. And he literally taught me how to design things. And so for my -- for starting out, he educated me the customer on how to design vacuum units, and then we've grown our partnerships since then. Like what Tony says, he wasn't an arrogant supplier that this told me that didn't just speak down to me. We work together. We fostered a relationship, and that's grown over the years. So might everything Tony said.

Yes. Yes. So Craig, the gentleman he's talking about spent Graham for over 50 years. He's one of our lead salespeople down in Houston. And when you talk about passion, if you want to talk 3 hours about a petrochemical facility or a refinery, just give Craig a call.

I hesitate to pick up the phone sometimes.

Yes, exactly.

I know it's going to be an how we're talking to Craig.

So did Dan, but no, it's a really unique experience to have that critical connection when you need it most. Next up, I want to talk a little bit about customer experience and partnership. Could you just share sort of the most memorable moment?

Keep it clean, right? So many have choose from -- so I'll just start with the Columbia program, Submarine programs had good press, bad press, we got to get new water for many, many strategic reasons. So we partnered with Graham, we being a bit [ BPMI ] because we had an opportunity to accelerate the combo build. So we engage Graham with, hey, we want to accelerate, give us your ideas from changing design, how you make it, how do you qualify people. So we partnered, all these ideas. So we were successful with -- based on Graham's input, our assessment of it, to basically come up with a solution to make design changes to implement new technologies from welding, machining technologies, lay out a process using manufacturing strategies, with process mapping, process controls, buy it, install it, a mutual partnership on the funding to do that. In a relatively short period of time, where I'm very proud, I'm sure you guys are tenfold more than me proud of showing positive metrics in quality, delivery and productivity. So just a snapshot of, hey, well, we have expertise to help you. We'll take on this challenge. But by the way, everything else you're doing still have to be done, and we'll execute. So to me, that's really one of the examples that I think, demonstrates what Graham has been presenting today.

Yes. Yes, it's a really good example. We're actually going to share that example later. And what you'll see there is folks are like, why are customers granting funding to Graham? And the reality is like there's a transparency and a partnership that forms. And then there's a good idea that forms. And then the idea is Well, we've got to go do this idea because there's no way not to. So we sort of help create clarity on to what to go do. There's examples of that kind of a cross gram. Actually, Mike's working on one right now in the Mark 48 program to refresh that [ TDP ] and there's other examples across the board. But I think that it really goes into those -- you sort of get in a pinch. And then it's forced to get close and then all of a sudden, you come out of something transformational. For us, out of that was automated welding. And what I will tell you is we've won that we still need our folks that are incredible welders. They're the backbone of Graham. But if we can augment them with a system for repeatable welds that moves us forward. So I appreciate that story. Royce, any I mean 25 years, you got to have one.

Yes, for sure. Actually one of my most favorite or professional accomplishments was fixing a long-term problem at the [ Phillips 66 ], Lake Charles refinery. It was a Graham vacuum column that had some issues, mostly because the client had designed and missed gave some information that wasn't correct. And all the major process people from the industry [ Norman Liberman ]. [ PCS ] is another big company had all looked at the system and failed to fix that. They've done some tweaks and different hangs and never fixed it. And at the time, I worked for Phillips and I got reengaged Graham, try to fix the problem, worked closely with Craig and we came up with our solution. And even being at the company, it took over 9 years because of all the political issues and people at the plant and convincing them and actually Graham actually sold the same -- we had to sell the same solution like three different times because they kept changing refinery managers. But very proudly, they finally did what we told them 9 years later. They installed it and fixed it. everything was working great as a big profitability boost for that refinery. And a very proud moment. And I was not that I was able to see that before I left the company, but that was definitely most memorable working with Graham.

Yes great example. And that's sort of what we're going to do with the next-gen nozzle right now, which we'll talk later. The reality is that's a huge upgrade for some facilities. And actually, Royce has been one of the pioneers of that. What we have to do is we, of course, have to find a leader to be the testimonial to be the one that takes the risk. Royce has enough experience enough tool sets to help him sponsor that. And so we've installed that equipment in their facility and had great success. So it's neat to see when these sort of things can come to life. Next up, barriers to entry switching costs. I just want to really briefly, how important is the long-term supplier relationship in your industry? What does qualification process look like for a new supplier?

The short answer is years for all the reasons we just talked about mission-critical the [ ASME ] requirements and [ NPE ] principal supplier requirements to material qualification, personal qualifications, equipment qualifications to customer approval and oversight. No exaggeration that infrastructure is necessary because of not just the executing the work, but the programs that oversee the work to ensure the things we talked about earlier operate the way they have to, otherwise a catastrophic event. So that being said, long-term partnership is essential. I mean I've lived the ups and downs of nuclear industry and bank goodness, I think today, we're embracing that form of energy both commercially as well as naval nuclear, which has been the constant throughout. The demand signals have an up and down, supplier base had to adjust accordingly. Obviously, it's a for-profit industry. So partnerships have gone. So to recreate a gram right now, if someone want to enter the market, it will be very, very difficult to do. that from a time frame standpoint and a resource perspective, again, in addition to your daily work, but quite frankly, there's no guarantees for success. Or lastly, you'll be profitable. So this type of partnership that Graham has with their customer base that already has been proven. How's the infrastructure has the culture, has the drive innovation from a user standpoint, those are the ones you want to partner with.

Yes. Similarly, for the vacuum injectors. These are very specific geometry driven large pieces of pipe that every vendor designs a little bit differently. So I would say that I've seen most refineries in the U.S., and I think I would conservatively say, Graham probably has 85% to 90% installed base on all the major vacuum towers in the United States and to change those to a different vendor would be extremely difficult just because of the geometry. Even if you could get the same performance, it wouldn't necessarily be the same length. And so if you're putting in a giant piece of pipe, you're not going to spend the money to change your downstream pipe and everything else. And on top of all the supplier qualifications, just even if you had a design that worked and you were already qualified, it would be extremely difficult to us to be competitive and because of the cost of installation. And so it would virtually say it would it's not going to happen.

I told them I wouldn't ask them any not preplanned questions, but you all know me. So we're going to do one. Throughout your career, what's been your most proud accomplishment? I mean you gentlemen are experts in your trade. You love what you do. Royce, you're still doing it after. You'll continue to do it for the rest of your life. Tony, you're still doing it after retirement. What's your most proud moment in your career?

Quite frankly, there's many choose from professionally being able to interact on the submarine with the end users and visually experience with their experiencing granted, I'm on the shipyard, not in the water and then coming back to us and telling us how proud they are of us to support them and our nation. So yes, we're here because of business, but it's great from my perspective that we can have a business but still do something so important to our country. And that is the proudest thing that I want to share with everyone was the opportunity to partner with people like Graham, but also do things from a national perspective.

I already talked a little bit about the revamp Lake Charles, I was extremely proud of that. And just being here today is very proud of is being recognized as an industry expert very fulfilling. I appreciate the invite.

Last question, then we'll wrap it up. So we're always thinking about the future. We mentioned the word planner. We mentioned the word, we're thinking ahead. We're talking about small modular nuclear today. We think that, that sort of to 10 years out before it's a meaningful part of our program or our portfolio, but we're laying the groundwork today on critical programs. Actually, Jed, I think we talk pick and shovel, and I've used that theme with our team. But I think the key is interfacing with industry experts to ensure that we're headed in the right direction. So can you share with us what capabilities do you think will become increasingly important over the next decade?

Well, quite frankly, more of the same that you have today just at a faster pace. Technology innovation, I think we just touched the surface. We are doing things faster from a life cycle standpoint. Quick side note, Matt, before I retired, we are being challenged by the Navy to do things faster cheaper and more reliable just like any other business we're talking about, but for the defense of our nation. So technology, innovation and your culture of taking on those challenges, that's what we have to do at a pace that, quite frankly, we feel uncomfortable. So if we feel uncomfortable that we are pushing the envelopes. This field and industry has a legacy of burdensome redundant. And quite frankly, there's some of that there, but we're real challenge to play in that traditionally safe place, which makes some of us old-timers uncomfortable, but that's where we have to push those envelopes, push that technology, push the analysis tools we have, the data that we've been collecting to make real-time decisions that help us. And you would sprinkle that all throughout your presentations today, and I'm just echoing that, to me, the companies that I see out there that are embracing this type of work. realize they have to do that. Now the ones that are being successful are ones that are doing it at a creative pace. How do I get the technology? Do I buy it? Do I partner? Do I invest in people? Yes. And that's what you and your team have to really push that envelope and then continue what you're doing, empower your people to implement that incorporate that in a safe to fail environment.

Great perspective, yes. Royce?

Yes. Doing less with more -- sorry, doing more with less. They're not building any new refineries in the U.S. So my career has been focused on revamps, getting squeezing more barrels through the same tower, lifting more light material out of the same tower. And like this last project that I did with Graham, we actually took a competitor's old vacuum system, revamped it with Graham, actually using less steam -- we -- using less energy input was able to get about 25% more capacity going from a competitor to Graham using their new nozzle technology. And so that's kind of in the right direction. Just revamp existing equipment, getting more out of it in the same footprint I think that's really the direction of American refinery. We're not going to be building any new units or are just going to be trying to optimize what we have, get better lift, better efficiencies out of what we have. And that's been the direction for at least the last 10 years.

Well, so much appreciate you guys being here today. For us, I just want to sort of recap. I mean, the first thing is I talked about how we win and its long-standing relationships. These are decades plus relationships that have not only embraced how we got to where we are, but they also are helping us form where we're going based on lessons learned. Second of all, mission-critical. We're talking about sellers at sea and protection of the U.S. work of the entire U.S. and speed, themes of just speed, density do more with less, the conversation, I think, is sort of embedded in today. So look, the nice thing is like this is in stage. These are our customers. It's actually such an honor for us to stand up here today with you, too. So thank you for coming with us. We got to enjoy dinner together last night. We get to enjoy the parade outside really grateful for you guys coming to New York. So we're going to go through one more section, then we'll do a break. At the break, I see the parades going on, and we actually have access to the balcony, so everyone can go watch, but let me get my stuff situated and then we'll keep going. Once again, gentlemen, thank you so much. absolute honor to have you up here.

So we've talked a little bit about the business units. I think you now know what we do. I think a lot of people have been confused about what we do and what we're trying to do. But the reality is, hearing it at once, [ Russ ], you've been following the story for a long time. probably as succinct as you could get in one presentation so far this morning. What I want to talk to you, though, is how this sort of wraps into a strategy. And look, I'm not going to be the one that denies that I have a pretty complex mind, and I think the team has a complex mine. So I want to try to break it down as simply as possible, but it's not the simplest strategy to understand. But our team understands it, and we're executing to it. So the first thing I want you to take away is thematic decentralized corporate structure. What I mean by that is we don't want to be a system integrator or a prime? We don't want to just be a holdco that has no synergy between the business units. We want to be sort of right in the middle where we have an ecosystem of products that can talk to one another that can learn off one another that has a similar customer base but has very differentiated technology. And so I just urge you to sort of think in your mind about five to seven business units niche world class at what they do, $200 million business units that has a unique culture, a unique growth vector about each of them and together we're stronger than just the individual parts. So that's the vision that I have for Graham, and I think the team is on board with as we move forward. With that, what we can do is we can leverage insights, we can leverage intelligence. We can lever thought leadership across the organization. And then we can get out of the business units way and let them go do what they do best in the world at. So with that, today, we have three incredible platforms. We have Barber-Nichols, which truthfully is world-class at Turbomachinery and has been since 1966. And people say, you have a long -- you have a long pedigree of success. But the reality is, we still have, you can feel it's innovation, this future look. Do you have a business that's founded in that has a strong foundation that's also looking forward. Second, you have Graham, 90 years, 80% market share in the U.S. on vacuum systems. We're now using that same technology, and we're bringing back our end stamp at the business to go pursue commercial nuclear in addition to our current business units. FlackTek, new business unit. I think the first time I met Matt, I think I told him I have a bigger vision for 0f than he himself does. And I will tell you, we're going to bring it to life. That technology, we have actually a thing called the FlackTek look I will tell you, customers when they first see it, they go, "Oh, my gosh, what am I going to do with this?" Because it's so impactful, they have to revamp how they think about their process. And we have folks like Andre and others, which we can't get into details that we see that look on a frequent basis. What I don't want to limit is the conversation around we're going to do this both organically and inorganically. So as we talk about thermal management, we could see that being a business unit someday. When we talk about power electronics, we actually have an individual that's going to present later today that's spinning our Power Electronics and Controller business out of Barber-Nichols into its own segment to bring that to the rest of the world. So what you're going to see is this continued growth within the business units organically. And we will bring some organic -- or some investments in like [ x-dot ] where we brought in a really sophisticated bearing package to further enhance their capability. And we'll also do accretive value acquisitions on the new capability side. So I think you get the theme that we want to be best-in-class in what we do with business units. With that, in each of the business units, super critical. We want them to be excellent across the entire life cycle. So when I say a customer comes and says, "We want to do a revamp like Royce is just going through". We can say "we understand the revamp, let's think about the process". We can deliver all the way to the end hardware, and then we can support them in the aftermarket. So every single business unit that we're talking here, I want to be excellent from concept all the way through service. Examples of that, that we'll use later, we think about the testing of Barber-Nichols for space. We couldn't test. We were pushing test on to our customer to say, "Please validate our systems". And tomorrow, we can go to them and say, we ensure that this is validated for your mission-critical application. The last thing is folks look at this and they say, Wow, it sounds like a lot of pieces. The reality is it's not really that many pieces. They have similar physics, similar end customers. And so our job is to do is pick the right pieces for the right solution to ensure value for our customer. With that, here's what the complexity comes. I could go through the entire strategy and just jump to the end, but I'm just going to walk you through it very succinctly. So number one, without incredibly prosperous and capable business units, nothing else matters. So the first is for Mike, for Will and for Matt [ Gross ], they have to have run outstanding business units in every aspect. Because without them, we have no free cash flow, we can't reinvest. We have no stable factor within the corporation. So we're doing that. And you can see the bubbles we're focused on both profitability growth as well as revenue growth within each business unit and within those business units and markets. Second, we're going to continue to expand the life cycle in the business units and at the corporate level. So things like I mentioned, testing and system intel, we're going to continue to grow that portfolio. In addition to that, we made the x-dot bearing acquisition. Barber-Nichols needed a very niche adjacent technology to then enable high-speed rotating machines for very precise applications like SMR. And so we're either going to home grow it like motors or we're going to go pursue it externally like acquisition. With that, we're a public company. We have a corporate team. It's growing. You're meeting everybody today before I remember telling a lot of you, we had a team of four. Well, today, it's growing, and we're starting to be able to support how do we grow our people through apprenticeship programs, to leadership development, et cetera. How do we bring playbooks in succession planning and commercialization and leverage them across the business units? And then all the way down to how do we deploy capital with a disciplined process. So we're going to continue to use the thematic decentralized corporate to enable not just support or overseas, we're going to enable the business units with that team. Where that all comes together is #4. And #4 is where you have a portfolio of products that are thematic and leveraged amongst each other. And so I'm going to use a few very crisp examples. Right now, Graham manufacturing stepped up to do all the [ STAMP ] certification for P3, which is developing an SMR for a very critical application. P3 in return is doing computational fluid dynamics for the next-generation nozzle for Graham manufacturing. Barber-Nichols on a very critical space or produce the equipment for P3 to accelerate that program by a year. So with that, you can't really see the synergies naturally, but we have -- we know the system intelligence, and we utilize that portfolio to our advantage as we move forward. With that, two things, I actually have not introduced this audience in like very specific terms because I too have been learning. So the first thing is efficiency. The second thing is SWaP. We've talked a lot about it today. Doing more efficiency, less size and the reason why is I'm highly confident that electrification, power density, more energy, all these sort of things that require power dense solutions is the future of the world. And so Graham is positioning ourselves not only for the ground-based applications of these but we're ensuring that we're ready for the mobility side of when this transfers from ground to every asset in the world. With that, I add #5. We actually presented this at our Board meeting. Number five, we believe is the multiplier. And what the multiplier is Mike talked, we have a pedigree of equipment. That equipment works today in space applications. It works on radar applications. We've proven it. We validated it. But what we've done to date is we've taken one solution to one customer, and we will never stop serving that one customer. They will be our #1 priority at all times. But we're going to start taking that solution that we have for that one end user, and we are going to start using it for other end users. With that, quick eye chart. -- but I'm not going to make you stare at the chart. What's important about this image is how this all links together. So when I talk about undersea platforms, you see a submarine, you see a torpedo. We actually didn't use to do any of this equipment. And what started to happen is we started to understand the ecosystem that this stuff operates in. Tony hit it best, mission-critical, survivability, must work every time. And so we had a quality system built around this capability. What happened is we won the condenser on one asset. Then we won the condenser on another asset. And then we said, "Oh, the similar technology can apply to the cooling system for the nuclear electronics". And then Barber-Nichols got the air turbine pump on Virginia-class. And then we said, "oh, we can do the overhaul for the entire submarine portfolio". And then we said, "well, Mark 48 is restarting again. Maybe we can do the Mark 48 torpedo. " And so the takeaway that I want you to have from this slide is we are starting to think at the ecosystem level of using the knowledge and the system intelligence that we've gained within that ecosystem to ensure that our solutions are married to where our customers are going. If you talk about space, everybody can read the newspaper. Well, in the 2000s, you'd read about Elon Musk using Barber-Nichols to design the first Falcon rocket engine turbo pumps. People say, "oh my gosh, you're not doing that anymore". Correct. But what's more important than that relationship, we have used that technology to do it for every other launch provider, and we still have a relationship. Second of all, Lunar Landers, folks walking on the moon. Surface fission power. You look at all the applications of that ecosystem that have been brought to life because of that experience, and we have the knowledge to do this over and over again. So my takeaway for you is we have market-agnostic technology. We get super focused on understanding the ecosystem in which our products provide, and then we ensure we bring the right product with the right team to the situation. I already showed this slide, but I just want to rehash it because we're in the improved growth phase. And what I mean by improved the growth is, first, in the improve, I don't want to look past the concept that we've made a lot of investments. Chris has been pretty gracious in saying and the Board to basically, with the discipline we've had, yes to everything. We brought a lot of rigor to that process, but now it's time to ensure that those improvements result in P&L improvement at Graham. And that's profitability and continued growth on the top line. While we're doing that, I mentioned before, we're not just going to do the improved phase. We're going to start making the investments in the growth phase. And Chris will talk about that later. But in example, this upcoming year, we're not just doing capital, we're actually going to start -- we're going to hire. We have opened the position for the aftermarket acceleration. We have opened the position for global sales. We're going to start bringing on the commercialization element. And so we're today going to start laying the foundation for our future scale. With that, I'm not going to cover this slide extensively because you actually all in the audience have seen it, and our team has lived it. What's important here is we've really changed Graham. We've revitalized an incredible business, and we've done it through solid planning, incredible execution. And so what I mean by that is, we today are a 60% defense business, long, stable backlog, 4x increased backlog, and we see continued solid pipeline. Today, we've done that through extensive discipline on our capital allocation, and we will continue to do that as we move forward with 20% or greater ROIC. Margins, with the exception of the 200 basis point lift with the Barber-Nichols acquisition, which I'm proud to, of course, announced that we were able to give back $12 million by hitting the max earnout on every single year to our employees. And so to the Barber-Nichols ownership team that was gracious enough to do that. Well, it had to run through our P&L, and it's a tough 200-point basis hit, I'm incredibly proud to not just say that we care about our employees, but invest back in them. With that, our margin. No one in this room that's presenting today wakes up to the average. We're -- we have to get back to average because we started from a point of weakness. But as soon as we get there, we're going to continue on the journey to be top quartile in our peer group. With that, we've mentioned a few times on our planners. The reality is we're actually thinking 5 years out. So today, we're going to show you 3 years, but we're thinking 5. And what we've done is the last 5 years, we created a plan. And that plan, I can tell you, [ Matt Hays ] is like in the detail, so he can also tell you that list of things across the top started off all is dots. And today, every single thing, except for the Batavia ERP, which is coming online in August has been implemented on time, on schedule and on budget. And right now, we're working to move that into realizing in our P&L but things from a new Navy facility, the revolutionized gram manufacturing, things like the next-gen nozzle that we were able to bring additional value that our customer like Royce brought to his factory, things like the cryogenic test facility which this week are getting ready to test the scamp pump for a very critical Lunar lander program. IT infrastructure which [ Keith ] will cover, we've revamped our entire IT across all the businesses to ensure not only is it that can move us forward. With that, while we've been deploying the $42 million and running the business, growing top line, in this case, 19% CAGR, we've also been laying the foundation for growth. And so Dan has graciously continued to utilize his vision to help us win new opportunities, and we'll talk about those as we move forward. So with that, across these markets, I want everyone to have this takeaway. Our technology is agnostic to end market. The competencies that we're building, automated welding, all this is agnostic. We can use it wherever we'd like as we move forward. because there will be tailwinds and there will be headwinds as we move through this journey. With that, I think everyone has seen this. These are the slides of implementation. The key takeaway for me on this is these are at the business units that we go to every day. And today, every single one of these assets is being utilized for critical equipment and they're in operation, there is people there, there is a product there and they're starting to deliver for our customers. So with that, we're going to go through this slide and then we're going to take a small break. What we're going to cover after this is actually the growth enablement for Graham. So we're going to go into a little bit of detail, but I wanted to go through 1 slide before we get there. So I've shown this slide before. But what's different is, before I just showed it, and now we're going to start doing it. And so I talked about business full product life cycle. And what I'm introducing here is a theme about corporate evolution towards full product life cycle. So Graham today, like I mentioned, is outstanding single solution for single end user. Through that process, we've retained the majority of the IP and lets a customer like the U.S. Navy needs to own the condenser, of course, designed for the naval submarine with owning that IP, we're going to start a few growth vectors. The first 1 is we talked about ecosystem. We actually know it really well. But we're going to start going and interfacing with it in a business forward business development mindset where we can couple our technology before the customer even reaches out to us. Second, we're going to talk through an example like a controller today. The controller started in R&D 3 years ago. Paul is going to cover it. It's in 2 active customers today, and we're going to go launch that to the rest of the customer world. Electrification power dense, all these themes, it does exactly that. Next, we're going to talk about global expansion. I think a lot of people have lost track of how important the process business is like Graham. 90 years of history, high profitability, there's a ton of international and domestic opportunity for this process business, and we're going to do that both domestically and internationally. And then lastly, the aftermarket, Will is going to touch on that. So with that, really focused on creating multipliers within the corporation and then embedding them in the bids as if they make sense. So with that, we'll take a pause here, maybe 10 minutes fill out, enjoy the parade and then 11:15, we'll regroup and we'll go through the growth enablement. And then we will wrap up with good questions. [Break]

The time has come. Paul [indiscernible], back to earth. Okay. So the last part of our presentation before we get to Chris, which everyone is waiting for, of course. We're going to go through growth enablement. And I want to make sure -- are we back on? Rachel, are we back on for webcast? Yes. Okay. So for growth enablement, I want to just frame it before we start. So what we're talking about today is 5 very discrete areas, actually 6 very discrete areas where we're making conscious commitment and we'll start making investment to support these growth vectors. And so in addition to running really solid, stable business units, this is going to be the conversation. And so we'll pass the mic though this portion. So Will is going to kick us off. Once again, who runs the Graham manufacturing business with operational excellence.

Thank you, Matt. So unfortunately, you guys get me again, but the cheers continue at this point. So I want to talk a little bit. And first of all, when we think about growth enablement, I want to make sure that everybody thinks of the 7 topics, 6, 7 topics that we're going to talk about here as kind of a continuum versus individual topics and individual activities because they interweave with each other, they interrelate with each other and they support each other. So let's start with the first one here, which is operational excellence. A lot of people talk about operational excellence. We think about it with 4 distinct pillars that are critical to the business. people, capital investment, process systems and product R&D. And let me start with the people piece. I think there's a couple of things here that I really want to touch on as far as the people goes. The first is our workforce development. So a really good example of that is what we're doing in Batavia right now. We actually have set up our own internal apprentice program for Welding. Any of you that know our business cover the energy and process in the defense business up in Batavia know that welding is critical to our ability to be able to produce our product and stay at rate to support on-time delivery and quality. And one of the challenges we have is how do you get qualified welders fast enough with the growth trajectory that we've been on or that we plan on being on. And we've gone and actually worked with a couple of the local schools to put together an apprentice program, which they do the initial training and then we have a very tailored training program that we do on-site at our own welding school, and we develop the team that then is deployed out to the shop floor and produces our products. And we will continue to invest in that team as we grow and we will also continue to invest in other areas potentially like machining to be able to grow our own because we think it's critical, and we want to control our own destiny. Second one I want to talk about is just lean operating culture. Again, this is another one where what we're trying to instill in the business and still in the people is how do we process -- how do we drive process changes? How do we solve problems? And how do we do it so that they don't come back again? And that is really the lean operating culture that we're going to be driving, and we're going to be investing in our folks with Yellow belt, Green Belt and Black Belt training. But it's also going to be how do we do that not only on the shop floor, which where a lot of the businesses really focus, but how do we do that in the business processes behind that because that's where a lot of the waste takes place in the business. So these improved productivity and employee engagement by bringing them in and making them a part of the solution. Second one is capital investment. Matt already talked a little bit about this, but that example over there that both Tony and Matt talked about in separate parts of the discussion, is the investment that was made in phasing up that Navy building. So one of the issues that we had was how do we keep up with the capacity of the load decks coming in? How are we able to support what the order book was and how do we go and build the capability on site in Batavia. And the customer helped us with that. They saw that it was value added. And so we've stood up the Navy building, which is maybe building 14. That was commissioned about -- a little over a year ago. We have mechanized welding in there, which was talked about earlier. Again, that's a game changer for us because it gives us the ability to do high-quality consistent [indiscernible] in areas that are very difficult. Advanced machining centers. So we were able to vertically integrate very complex, large machine parts that we were sending outside and was taking a significant amount of time to process. And then our x-ray. So this is upgraded and cutting-edge inspection technology, which has cut our inspection time by almost 90%. And when you take a look at all of that, 50% lead time reduction and about a 10% capacity gain. And I think we're actually going to see more than that as we continue to lean out the processes in that building. Processes and systems, ERP modernization and AI-assisted workflows. So again, we've talked about the ERP modernization, and Keith is going to spend a little more time on that, talking about how he's driving that across the businesses. But for us, that's going to give our team the ability to have better access to information, more accurate information and make decisions every day crisper than they are today and then AI-assisted workflows. And I'm going to spend time on that in the next slide when I talk aftermarket because we're using that for intelligence to drive speed in decision-making. And then the last one is product R&D. So we're teaming with the team down at P3 allows us to go much faster from an iteration standpoint when we're going through R&D Instead of doing the old it works. It doesn't work and then I'm going to try something else. We're now able to predict what's going to happen before we actually build something and test it, and then we've added testing capability and testing speed. So that allows us to bring products to market faster. So again, these 4 pillars are going to be critical to the growth and they're going to be critical to the performance of all of our businesses as we move forward. All right, aftermarket acceleration, one that's near and dear to my heart. I think this is an untapped opportunity for the business to be able to drive value and really be able to drive shareholder value into the business along with value for our customers to 2 of our most important key stakeholders. We have a huge installed base out in the marketplace. Take a look at that map of the U.S. and Central America over there. Every one of those red dots -- and Roy's talked about it, every 1 of those red dot has Graham content in it, which means we have an opportunity that is unparalleled in the industry. If you take a look at the graph up there, I know you can't read it, but those big purplish red bars up there, that's the amount of spend in a percentage amount that's going to be spent on upgrades and maintenance in the refineries in North America, to 85% of the capital budgets over the next 20 years are going to be spent on upgrades, which means aftermarket is going to be an absolute critical piece of what we're doing. And so in the past, we've been very reactive with our aftermarket. As I mentioned earlier, we wait for the phone to ring, we say, what do you need, and then we figure out how to go make it or how to support it. And instead, what we're going to be doing now, and we've already got this going on right now is we're developing AI-assisted tools along with proprietary data sets that we own internally at Graham to say, okay, where are the markets going to be in the next few years? Who's doing maintenance? What do they need based on the historical data that we've seen. And let's give them a call and say, "Hey, we're here for you." And by the way, we'll have it ready for you on your time to do your turnaround instead of reacting. And that's a huge opportunity for us. Along with that, I talked about the R&D piece, we have the next-gen nozzle out there. So we can take an in-kind replacement with an upgraded technology and give them the opportunity, our customer the opportunity to gain more value out of their process. And what does that mean? Could be [indiscernible] savings if they want it. It could be more products coming out in less hours or it could be a combination of both, which adds value for that. So again, we will be driving all of these. We are driving all of these as of today. Those are already installed in some applications around the world. And this is an opportunity that we feel is going to be a big growth driver for us from a profitability and a cash flow standpoint going forward. Okay. And with that, I am going to hand it over to Dan, who's going to talk about the business development commercialization.

Good morning, everyone. So happy you're here with us today. Gosh, we have never been able to go this deep on our business since I was the leader at Graham. And so this has been a special treat to be able to go this deep and tell you all the cool things that we're working on. So thanks for coming. For those online and that we'll watch later, this has been a blast even with the parade going on in the background. It's been a blast. So I'm Dan Thorn. I was former CEO of Barber-Nichols many years ago and then became the CEO of Graham Corporation and then Executive Chairman. And today, I'm working on business development for Matt. And I want to talk about business development. I'm also working quite a bit on leadership development with Rachel coaching with all of our leaders and just really -- it's funny, you kind of get to this point in your career, and you go, shoot, I know quite a bit. And if I could pass this on to people, it would be really useful, too. And so it's been awesome. I've really enjoyed the transition and where Matt and team are taking this company. It's really exciting. So on this [indiscernible], you've heard quite a bit about how Graham, how Barber-Nichols has done business development in the past, and it's the ring method which worked really well, right, because if you've got some great capability and your customer needs a solution, they call you and you say, "Gosh, tell me all about your solution or tell me all about your problem and I'll come up with a solution." And it's worked out really well, but we're leaving a lot of cards on the table, right? If we could figure out how to commercialize this, go out and talk to customers to understand what is that they need to find common customers for a single solution, we can commercialize this and get quite a bit more value extraction out of this. So most of our long-term investors know Graham as an ETO, an engineer to order kind of a business. This ETO business is kind of based on decades of innovation, this proven critical equipment supplier and then the ability to really make sure that it works. And so that's really captured on the left side of the graphic there. So today, a customer comes to us, we learn about what they're trying to do. We come up with a solution, and it's a one to one, very much like Matt talked about before, 1 problem, 1 solution. In the future, we're going to spend quite a bit more time with the customer up on the upper left and really trying to understand their needs, go out and talk to the second customer learn about their needs, the third customer talk about their needs and really try to develop a solution that can be used across multiple applications. And you start to get that multiplication effect that Matt has been talking about, where you can sell the same thing to multiple people. The business development activities on the right-hand side have all started. The process is defined, the playbook has been developed. The teams have been formed and we're focusing on 3 particular areas. So commercial nuclear is the first one. So you're hearing a lot about commercial nuclear, and we're going to stand up, and we have stood up a team to go chase that business. The unmanned undersea vehicles, the Navy-related stuff and then motor controllers. We're on the road. We're visiting customers. We're understanding their challenges and then we're developing solutions for their problems. Ultimately, the commercialization is realized. When we combine this business development with this new product introduction kind of a framework. And we can provide solutions to a lot of different applications. When that happens, we'll see growth both organically, i.e., more volume. And because we're making the same thing over and over again, we'll see improved profitability. To give you a sense of what this is going to look like, Paul Nesler is going to come up and talk you through motor controllers and what we're doing there.

I'm Paul Nissler, Graham's motor controller business unit leader. I recently came back to Graham. I had actually been the Electrical Engineering Manager previously at the Barber-Nichols subsidiary, took a detour going to a venture capital-backed start-up, I was able to successfully launch a number of product lines for them. And I'm coming back with that experience to apply it here with the team that I have worked with me in the past that I've enjoyed working with on a product that I'm excited about. So what I'm going to be doing right now is walking through an example of the process that Dan was talking about before, just as a case study to kind of show we can do. As you said, we are planning to do this whether it's on additional electronic products or even on other product families such as the commercial nuclear that was discussed before. So has a little bit of history for Graham's motor controller products, we have been producing motor controllers for over 20 years. They've always been done on an individual project basis as talked about before. One customer comes in, we come up with a daily solution, end of story. We started going down the process that Dan had outlined, then we said, okay, let's go out there, let's canvas the customers, better understand what are all the requirements are in the landscape out there. We looked at inbound requests, past projects, we have executed one-on-one customer outreach and engagement and kind of created a landscape of all the requirements and what people are really looking for. We started then segmenting that market and really studying kind of what are they really looking for? Is there any product where we can get overlap and cover a lot of these requirements simultaneously. And it became apparent to us that there is a handful of electrical products that if we develop those, it would be able to serve all a wide variety of needs that we'd be able to switch from that one-to-one model to a one-to-many model. So we kicked off that first initial design effort kind of said, okay, this is the first -- like I said, there's a handful of products out that we want to go after, but we said, okay, here's the first one. Let's just go and prove that model out. We set the engineers to work and they came back with a flexible and scalable architecture. Flexibility is key for all the customers. There's always something that they want to customize in the design. They want to have their fingerprint on it in some ways to perform and maybe a different exterior coating on the outside. They want different paint color. They may have a different electrical connector on the outside as for how it interfaces with their system. There's always something that they want to be tweaking this a little bit, maybe there from thermal management solutions. They're going to be using it in a desert environment or high altitude. Someone else is going to be using it in an underwater submerged environment. There's tweaks like that. We built the flexibility into the design. Scalability is also critical because the more that we can have a common design components and subassemblies underneath there. it's going to benefit both us and the customer because we're going to have -- it's going to be a more robust design. We have more heritage with that given component. It's going to be a lower cost design as we reduce the amount of engineering going into it, we were able to compress the schedule by reducing that engineering. We're going to get production volume discounts as we go through this particularly on electronic products, there is a steep learning curve on your pricing model. So we are able to bake that into the design as well. So we have a design. We kind of know what we are doing. We ended up switching that even though we are still working on an inbound call model, we have the sales team, he switched to starting to sell this product when that comes to baseline this new proposal that goes out. And I'm happy to say that it's been working. We started off with that model that we had come up with that design. And to date now, we have been able to get 2 customers that are actually on contract, we have orders, we are delivering that product to them presently. We have additional ones that are in active discussions with where we started to a little bit more proactively engage. As you'll see up in the upper right-hand corner, I mean, the market for electrification and all the different areas we can go into is a huge market and there's multiple markets. We're working on trying to segment that, understand the ideal beachhead that we really want to go after is our goal is that within 5 years, this will turn into a $30 million to $50 million business unit just on its [indiscernible] standing. So that's what we're trying to go for. And we're trying to start working on that more proactive customer engagement. Like I say, we've reached into some of these industries. We have been dialoguing having discussions but we've still got to get to that final kind of -- make that final selection of the exact beachhead that we're going to be pursuing and just go at it and make it happen. We do want to be prioritized on that. So that's what we're working on presently through these customer discussions. Lastly, the thing I'll close with is the part I'm actually most excited about on this slide is actually on the bottom right; the team. We have a fantastic team. We have -- whether it's ranging from some of our younger early career professionals, engineers working on things who are just overflowing with enthusiasm, eager to make the mark on the world to having seasoned industry veterans who have successfully launched products into these markets that we are considering. We've got a fantastic team and I think it says a lot when your team is excited and hungry. And we are all just engaged and aligned, know what we're going after, and I'm just proud to hear their stories. So with that, thank you very much and I will pass it back to Dan to talk about global expansion.

So Will had talked about the Energy & Process business and $1 billion installed base around the world. we think that there's more. So the way that we're going to attack that is kind of shown here in the middle. We've been in China for a couple of decades. We've been in India for coming up on close to 10 years. And we've got some really good experience internationally, both good and bad. And frankly, the world is changing quite a bit right now. The nationalistic trends are a challenge in some areas. But if you look at it, you can kind of make hay with that, right? You just got to go join them and so we think that the global unrest that we're seeing, the war in Ukraine, the war in Iran, has really kind of pushed this idea of energy security forward. The resilience for energy resilience is also really, really important. So it can't be reliant on just one form of energy, getting more and more sources of energy is really what people are looking for. That actually fits us pretty well for all the things that we're playing in. As I said, it's getting a little bit nationalistic, People want to build in country. You have to be there in country with them. And thankfully, Graham had the foresight many, many years ago, just to get into China and really start to understand that Asian market to get into India been a Middle East supplier for a long, long, long time. And so we really do understand those markets. We're just going to have to build in those markets going forward. Now we have been building in China, we have been building in India, and we're going to have to continue to do that to continue to serve all of our international markets. We have to maintain control of our brand and our process and our quality in the meantime. You can lose it. And we've seen some of the challenges associated with operating in foreign countries where you can potentially lose all of that really important stuff going forward. We've learned those lessons and through active management, we're going to hold on to those. Those partnerships that we've developed in those different countries will give us cost advantage. So the United States used to pay, they would only accept U.S. produced equipment put into the refineries and the petrochemical plants, no more. So they're accepting a lot of foreign-made equipment to come into those plants today. Those relationships that we have in those countries are going to give us that advantage. Will talked about 85% of the spend is going to be on revamps and maintenance associated with these plans. We're going to be able to serve it in a cost-effective way using these international partners. The other really cool thing about developing these relationships and this capability internationally is when some of these commercialization opportunities that we've just been discussing can go to high volume. We're going to have sources, whether we use them or not, of international fabrication manufacturing that can actually produce these cost effectively and really give Graham an advantage in the business going forward. So Matt says, we're thinking 5 years out. We're thinking 10 years out. We're saying, where is this going to take us? And he and the team have really put together a really nice strategy that has us thinking that far out and we're saying, what if this happens, are we going to be ready? We are. Given the international experience that we have, we feel very confident that this is the right move that we're going to be able to win with this and get good return on invested capital. I'm excited about that. Next area of growth is IT modernization. And Keith [indiscernible] is going to come in and tell us all about what he's been up to.

Dan, on -- I wanted to cover on the international expansion. I wanted to like to realize it's not in your strategy, it's not U.S. or international. So I think that's key [indiscernible] here to continue fabricating look within the U.S., we are to continue to invest in the [indiscernible] elsewhere. This is a multiplier strategy, not a longer view.

All right. Well, good morning. So my name is Keith [indiscernible]. I'm the Chief Information Officer for Graham Corporation. I want to briefly share my background because it directly shapes how we're going to approach Graham's transformation. Over the past 3 decades, I've built my career leading large-scale technology, cybersecurity and operational transformations in complex regulated environments. I served as a regional CIO at Marsh, who I let insurance agency acquisitions and integrations across multiple states, work that require disciplined execution, rapid standardization and the ability to bring newly acquired businesses onto common platforms without disrupting revenue. Following my work at March, I transitioned to Vice President of IT at all under shipyards where I led a major ERP modernization effort and built the cybersecurity program capable of supporting Navy, Coast Guard and commercial shipbuilding operations. [indiscernible] fluid modernizing legacy OT environments, strengthening compliance and enabling throughput improvements in high-value manufacturing. I'm applying those same lessons at Graham, gained experience from regulated industries, multisite operations and mission-critical manufacturing to accelerate our digital transformation, reduce operational risk and enable scalable growth. For many years, Graham operated with reactive technology investments in a fragmented landscape of systems that can train performance, what we've done over the past year is shifted digital and information systems from a constraint to a strategic enabler, improving throughput, strengthening cost controls and reducing operational risks in ways that directly support margin expansion. Let me highlight 3 concrete examples. First, our ERP modernization effort across the manufacturing value chain, we're stabilizing production, planning, procurement, inventory and shop floor execution. This will materially reduce downtime, improve throughput and strengthen cost controls, directly supporting the margin and cycle time improvements you've heard throughout today. Second, we're enabling cross-business unit collaboration through Office 365, by creating a real-time communication between engineering, operations, supply chain and quality. We're accelerating nice resolution and reducing cycle times. This is a foundational capability for multiplant multi-market business operating with speed and precision. Third is our progress towards CMMC compliance. It's not just a cybersecurity requirement, it's a competitive advantage. We are on track to be compliant by year-end, positioning Graham to win additional defense contracts in markets for trust, security and operational discipline or differentiators. These are just a few examples within a broader road map that also includes harmonizing our IT and OT systems, enabling cloud scalability for multi-plan operations and deploying AI, automation and analytics to improve operator efficiency and create unified production intelligence. These investments are laying the digital foundation for Graham's growth base, ensuring we are positioned to execute with pace, discipline and scale. As Chris will talk about in more detail, these initiatives are already reflected within our CapEx guidance, and we expect them to generate returns exceeding 20% ROI. All right. And with that, we'll bring Rachel Jaakkola up here.

Hi, everyone. I'm Rachel Jaakkola again, chief Human Resource Officer at Graham Corporation. So the thing that I want to talk about is something that doesn't necessarily get a lot of airtime in these presentations and not the people and the employees that we have in our organization. So we talk about Graham's ability to deliver these really complex projects and programs, and we want to be doing it fast. But really, the honest thing is that, that doesn't happen without the people and our team is really our force multiplier. So I want to walk through some of the commitments that we have to our workforce and then show you how those commitments are translating into impactful outcomes for people. So our expertise really lies in the people and their judgment, their craftsmanship, their institutional knowledge and how they engineer those solutions to some of the most demanding specifications in the world. So we really do treat our workforce as a strategic asset. One of the first things I want to touch on is shared success. So we do have an ESPP program, and we believe in that shared ownership with employees. So when Graham performs, we want employees to participate in that value creation. We really feel that, that helps employees really believe in where the company is going and then also having kind of that skin in the game for that value creation for Graham. So 30% of our employees have chosen to invest their own dollars in Graham Corporation. So that really shows us that people really believe in what we're doing and that is higher than average. So this ESPP isn't just a benefit, but it's an alignment mechanism. So we really use this to have employees think like owners and then they make decisions like owners. And then they're more deliberate about the quality. They're more invested in about efficiency, more attentive to the details. And then what separates a good quarter from a great quarter, employees are involved in that. So second theme is then attracting top talent. So a signal that I personally pay close attention to is our employee referral program because to me, one of the strongest indicators of a healthy culture and being an employer of choice is the percentage of new employees who come to us through employee referrals. So a referral means that an existing employee is willing to put their own name on the line and they believe in a company that they work for and in this case, Graham Corporation. So they believe in our culture, our leadership, our opportunity and they're trying people to come work for us. So that's important to me and to the company. So you earn kind of this trust from employees by doing things right. We're developing them. We're listening to their feedback or making sure that they share in our success. Our referral rate is proof point that those investments are landing. The other thing that I want to mention is engagement and continuous improvement. So something that connects our people strategy directly to our operational strategy is this employee-led continuous improvement. Our employees aren't just executing against a plan that someone else came up with and wrote. They're really identifying the problems proposing the solutions and leading the improvements. So these people are raising their hands. We're bringing ideas and that culture of ownership and continuous improvement is competitive advantage for Graham Corporation. I'll close with this. So every commitment that we make on these financial slides really rests on the foundation of our workforce. The capacity that we're building, the quality we're delivering, the partnerships. We're growing the people is what makes those outcomes really possible. So we take that responsibility very seriously. We invest, listen, share value with them. And because of that, they choose us. And because of that, you can count on us to execute. So thank you. And now I will pass it off to the person you've all been waiting for, Chris Thome.

What a great day, start off with the bell ringing. I can't believe 2 million people showed up for the Graham Investor Day. A little bit more than we expected, but a lot of great press. So thank you for those joining here in person for trudging through all the crowds and the crowded subways coming in from out of town and I pretty much met everyone here today in attendance. But for those of you that are on the webcast, my name is Chris Thome, I'm the Chief Financial Officer for Graham Corporation. And I would like to take the next few minutes just to walk you through how all the exciting opportunities you heard about today translate to our future financial performance. From a financial perspective, there are a few key messages that I would like you to walk away with today. One, Graham has provided consistent performance over the last 4 years where we saw a steady improvement each year. And in short, we did what we said we were going to do. This improvement was driven by our get-better-everyday culture and steady reinvestment in projects with a greater than 20% ROIC. These projects along with an improved mix of higher-margin revenue, are expected to drive continued margin expansion for the next several years. These initiatives, along with our $533 million; yes, $533 million, of backlog give us confidence we'll be able to continue to drive 8% to 10% organic revenue growth over the next 3 years and additional adjusted EBITDA margin expansion to the 14% to 16% range by fiscal year 2029. And finally, as always, we will continue to follow our disciplined capital allocation philosophy that favors the highest return organic growth opportunities first and a disciplined strategic M&A strategy to accelerate profitable growth, but only for the right opportunities. This slide illustrates the steady improvement I was just talking about. Over the past 4 years, we have transformed our financial performance, achieving 19% revenue compounded growth, 45% adjusted EBITDA compounded growth and 80% adjusted EPS annual growth. I should point out that nearly all of this was organic and puts us on track to hit the fiscal year 2027 targets we set 4 years ago. Again, we did what we said we were going to do. Finally, with the improved financial performance came significant cash generation with nearly $90 million of cash flow from operations over the last 4 years. Note that fiscal year '26 cash flow was impacted by $4 million of transaction bonuses that were awarded by the former owners of FlatTek, but then were paid by Graham, but were a reduction of the cash purchase price paid. So really, the $16 million of cash flow from operations for fiscal '26 was closer to $20 million. We took this strong cash generation and reinvested it back into our business. Approximately $50 million has been reinvested in Graham over the last 4 years with some of the projects that you've heard today, each with a greater than 20% ROIC and will enable our future growth and margin expansion. One of the reasons for our improved performance is the relationship and trust we have developed with our customers, some of which you heard from today. Over the last several decades, we have established ourselves as a strategic supplier to our defense and commercial customers. Proof of this is in the growth of our backlog, which has increased at a 20% annualized compounded rate over the last 4 years. This has come through winning both new content as well as growth in existing programs. Approximately 85% of our $533 million backlog is to the defense industry, which provides us tremendous visibility and stability. Approximately 35% to 40% of our backlog is expected to convert to revenue over the next year and another 20% to 25% in the following year. This illustrates the long-term nature of our defense contracts and the visibility it brings to our business. Over the last 5 years, we have averaged a book-to-bill of 1.3x, illustrating the diversification, growth and momentum in our business and our markets. This has primarily been driven by an acceleration of our defense business, given all the geopolitical tensions as well as the confidence our customers have in our ability to execute. Additionally, as of late, we've seen an acceleration in our space orders as programs begin to ramp as well as an increased activity in our new energy business such as SMRs and hydrogen that Will talked about earlier. During fiscal 2026, our space orders increased 76% over the prior year, while our new energy orders were up 185%. Our annual goal is to achieve a book-to-bill ratio of 1.1x each year. This is in order to support our 8% to 10% organic revenue growth. With that said, our book-to-bill ratio can be very lumpy from quarter-to-quarter and year-to-year, ranging from 0.5x to 2.4x in any given quarter and reflects the long-term nature of our contracts, especially our defense contracts, which are larger in size and can span several years. One other point I would like to make before leaving this slide is the diversification we have been able to achieve in our business over the last 5 years. As you can see from the pie charts, on the bottom of this slide, we are no longer a cyclical industrial company, subject to the ebbs and flows of the oil and gas market, but rather a stable, consistent, diversified industrial company. Our long-term goal is to have a 50-50 split between defense and commercial in order to enjoy both the benefits of the stability that the defense business brings with it as well as the higher margins and growth rate of our commercial business. The heavier weight towards defense revenue as of late is primarily a result of our customers' desire to increase shipbuild schedules as well as the slowness we are seeing in the large capital projects in our Energy and Process business. Over time, we expect this ratio to move closer to the 50-50 split, which will be assisted by the FlackTek acquisition, which had an 85% commercial portfolio. Our disciplined capital allocation strategy has not changed. First and foremost, we will always focus, number one, on organic growth, which is our lowest risk and highest return use of capital. We will maintain a disciplined approach and only pursue the opportunities with the highest return with a target of at least 20% ROIC. Additionally, we will only invest in new buildings and equipment when we are confident that we will win the revenue to support the investment. With that said, we just announced that we are about to break ground on a new 30,000 square foot manufacturing facility on our Barber-Nichols campus in Arvada, Colorado on land that was purchased a few years ago. This building will enable continued growth for years to come and has an over 20% ROIC associated with it. And is the main driver between the $18 million to $22 million of CapEx spend that we have guided to for fiscal year '27. The second priority with regards to capital allocation is debt repayment. With that said, I am pleased to report that as a result of the recent $50 million PIPE transaction completed in April, we are now debt-free as the proceeds from the transaction was used to repay the $13 million of debt outstanding at the end of March. The excess proceeds from this transaction as well as the $80 million revolving credit facility we have in place provides us with over $100 million in liquidity and provides us significant flexibility to fund both our organic and our inorganic growth opportunities. As stated many times in the past, we intend to spend 7% to 10% of revenue on capital expenditures and we'll gradually begin to increase our R&D spend from the current 0.5% of revenue to the 1% to 2% of revenue level, but only with the proper returns and a large portion of which will be funded with the assistance of our customers, like Mike discussed earlier, the $29 million of supplier development funds that we've received to date. And finally, our third priority with regards to capital allocation is M&A, which continues to be a part of our long-term strategic plan. This slide is one you've all seen many times before and outlines our M&A guidelines. The nice thing about having visibility to 8% to 10% organic revenue growth is that we don't need acquisitions to grow. We will continue to execute a disciplined acquisition strategy that pursues privately held companies that have deeply mooted technology that is differentiated and that have a high growth potential. We do not intend to get into a bidding war that only raises the prices and are only looking for companies that fit the culture of Graham. Matt and Dan have done an amazing job mining these opportunities and the pipeline remains full. The Graham value proposition to private sellers is real, which oftentimes allows us to be an exclusive bidder and not overpay for a transaction, thus creating tremendous value for our shareholders. And as this slide illustrates, we have been able to execute our M&A strategy effectively over the last 5 years with a strategic acquisition every 12 to 18 months and all of which meet the criteria that we have laid out. All our acquisitions were privately held, had strong cultures, strong product alignment and deeply mooted technology and all were purchased at a reasonable multiple, which reflects our disciplined approach. As I said before, M&A will continue to be a strategic priority for Graham. This slide summarizes our guidance for fiscal '27, which we released 2 weeks ago. We expect revenue to be in the range of $285 million to $295 million, which represents an 18% increase at the midpoint and is supported by our record backlog, our strong demand environment and contributions from a full year of FlackTek as well as continued execution across our Defense, Space and Energy process businesses. We expect our gross margin to be between 24.5% and 25.5%, reflecting the benefits of our operational improvements, our automation, our productivity initiatives and the integration efforts and an improved mix versus fiscal 2026. SG&A expense is expected to be between 16.5% and 17.5% of revenue and includes the impact of approximately $2.5 million of incremental investments in people, technology and commercialization, which will run through the P&L. This includes an increased level of R&D, costs incurred to pursue commercialization like Paul just walked through and Dan, as well as the many other projects that you've heard about today as well as to build out our leadership team, which is joining us here today in order to build our bench strength in order to support future organic and inorganic growth. Based on these assumptions, we expect adjusted EBITDA to be between $35 million and $40 million, representing a 4ryootorry, representing 44% growth over fiscal 2026 at the midpoint and is in line with our long-term profitable objectives. I should point out that currently, FlackTek is a 10% adjusted EBITDA margin business, which is lower than the company average, but is expected to quickly improve to levels more in line with our business as revenue scales. We remain very optimistic about this business. And now for the moment you've all been waiting for. Turning to our long-term guidance. It is more of the same. I hate to sound like a broken record, like Matt said. But when it's a good song, we just keep playing it, right? Based upon our significant backlog and our future outlook, we see organic revenue growth continuing at the 8% to 10% rate for the next several years and also expect our adjusted EBITDA margin to continue to expand to the 14% to 16% range by fiscal 2029. This puts Graham at a $340 million to $350 million revenue company with approximately $50 million to $55 million of adjusted EBITDA by fiscal '29. This steady improvement is what we have come to expect from Graham with our ultimate goal to be a top quartile performer, which has adjusted EBITDA margins in the 17% to 18% range. This incremental margin improvement will be driven by higher volume, improved mix as we get closer to that 50-50 split and continued execution, leveraging the investments we've made over the last 4 years. The executive team at Graham doesn't strive to be just average, and we will not stop getting better every day or be satisfied until we achieve this top quartile performance. In summary, Graham has provided consistent performance over the last 4 years, where we saw steady improvement each year. This was driven by our Get Better everyday culture. The initiatives you have heard about today, along with our significant backlog gives us confidence we will be able to continue to drive 8% to 10% organic revenue growth over the next 3 years and adjusted EBITDA margin expansion to the 14% to 16% range by fiscal '29 with our sights set on top quartile performance after that. We will continue to follow our disciplined capital allocation philosophy that favors the highest return organic growth opportunities first and disciplined M&A second in order to accelerate our growth. Thank you for your time today. And I'll now have Matt come back up to answer some of your questions.

All right. Let them roll.

Jed Dorsheimer from William Blair. I want to drill into backlog a little bit more. And in particular, I guess one of the challenges is having to say no to customers even when they are excited about the growth profile and in particular, hydrogen was one that kind of jumped out. So at GE, where I know you've spent a lot of time, Vernova's approach is to tend to take higher deposits and then milestone payments. So is that -- are you following that approach in terms of the backlog to derisk where a customer may believe in the growth profile, but -- so you don't get stuck with stranded capacity exposed to a market that doesn't take off, even though the customer believed that it would.

Yes, it's a great question. We're taking the exact same strategy. I lived at GE. It was a great model there, and it's a model that I think FlackTek is starting to get used to this concept of get paid upfront. So that business, we're even seeing the opportunity for down payments right upfront. With that, across the portfolio, we've been in a very unique position. The majority of the programs that we're winning on the defense side, they're actually providing as a bank the opportunity for the business to execute. And so working capital is really well leveraged and managed. With that, across the majority of our footprint, which is why we're constantly buying new property and building buildings is we have demand as we move forward. So we're having to be highly selective of what opportunities we pursue. And I'll use Barber-Nichols as an example for that right now. We are ensuring that our customers are ready to sign on the dotted line and/or already have before we're making those investments, and we're using that as leverage with them, but also having them with transparency provide commitment back to us. Examples, we're seeing space demand result in booking of orders. We're seeing potential expansion on the air turbine pump side, growing with spares and fleet support. And so across the entire corporation, the themes that I would give you is we're focused on early payment, contracts that we know are on strategic priorities within the end user base. And then I'm not going to sort of miss this point. We still want to do things that are disruptive. And so we are taking some chances. And I say chances, they're strategically calculated, they're well planned, and we're making sure that the customer is ready to pay. And so if the risk portfolio on a new development for space is high risk, we're asking for more payment upfront. We're not putting any of our own capital typically in early. And so we're just changing how we start that relationship with the customer. And in some cases, we're actually asking them to overinvest in profitability.

Yes. The only thing I would add to that is that from the numbers we gave out and we've said many times, roughly 30% of our backlog isn't due until 2-plus years out, right? So it gives us time to get the long lead materials ordered, get them on our campus and planned in order to be able to execute those contracts. So we're not worried about the $533 million of backlog at all.

Russ Stanley from Beacon Securities. Just you talked a lot about being market agnostic and looking at FlackTek and the company has made or achieve penetration in end markets well beyond what Graham currently plays. And I'm wondering how you're thinking about those opportunities, how you're thinking about nurturing them beyond -- given they represent a stretch beyond your current 3 segments?

Yes, it's a great question. Let's use FlackTek as that conversation. FlackTek comes to us, they're serving equipment to 5 SKUs essentially, 5 products to in today's 40 different end markets. What 40 end markets means is they have picked up the phone for 20 years and responded, which has not allowed them to focus in one given area, but it allows them to nurture their equipment to a broad community of end users. So we're taking a strategy there that I would say is twofold. The first is you never stop picking up the phone. So we're going to continue picking up the phone with whoever we will call and we'll have that conversation. We're going to work on smaller type machines, smaller footprint machines in that business, getting to the point where the time to sell is not so long. So the touch point of the smaller type machines, let's make that more process efficient. The opportunities, though, then we're going to focus in on beachheads. And what I mean by beachheads is I'm going to use [ Energet ] as an example or Energetics, how can we not, right? Battery chemistry, electrification, supercomputing, the thermal panels that go on the side of spacecraft, which I think you can sort of do the math as to what's happening there. My point there being is we are going to focus in on beachheads where we know that there is differentiation and we know there is capital investment. And so when we get those beachheads, we're going to focus on a very specific outbound strategy where those people have already been hired. They work for that today, but recently, and we're going to go on the offensive. And so that's a very crisp return on investment. That's very crisp communication of how it will integrate into their factories and deliver results for them. So Russ, I think you're going to see a theme of this. Dan actually hit it perfect. He did it at a much higher level. Commercial nuclear, controllers, and undersea, I'll just say, advanced propulsion systems are our 3 primary. I think you can get why. We're well positioned there, and they're all -- they're in the future. What I will say is FlackTek is just the fourth, right, but it happens to be a business unit.

And the thread that holds the Graham business together is the technology, right? We have highly engineered can't fail med technology that spans across many, many different markets. So we're not really focusing on a market, but rather the technology, which is the differentiator.

Yes. So -- and while you pass the microphone, our team of sales today is small. You look at Barber-Nichols, 250 employees, there are 7 sales folks. 7, Mike? 8? 5? Okay. 5 to 7. Mike says 5, so it's 5. At Graham, it's 2 handfuls. The point there being is there's an opportunity to actually do this differently. And so we've been doing it that way. We will keep doing inbound sales, but we are going to go on the offensive with the commercialization strategy. The reason we've been talking CapEx to date. We've been talking about R&D at 0.5%, which, by the way, our customers actually invest a lot in us to do R&D that we end up owning. But where we -- why I want to invest $2.5 million of P&L profitability back into the business is because if we don't grow this commercialization phase, we're just missing a huge opportunity. And that takes people and knowledge.

Bobby Brooks from Northland Capital Markets. A lot of exciting changes you guys -- changes occurring or planned that you guys -- in the business that you guys talked about today, like the outbound -- what you just were touching on like outbound sales process or the aftermarket piece and taking one solution for one customer and then applying it to multiple. It's really exciting stuff. But what I was curious to hear and get a sense on, are those benefits from those changes baked into the long-term targets that you guys rolled out today? Or are those potentially as those play out, could those become drivers of upside to those targets?

So I would say the majority of that is baked in. some of the projects you heard about today contributed about $10 million of revenue in fiscal '26, and we're expecting that to grow to north of $50 million by fiscal '29, but it doesn't include all of them. Certainly, we just hired some of the people to come and have these take off, but we only included the ones where we felt fairly certain that we were going to get that revenue. So there potentially could be some upside there.

Yes. And let's say it like this, Paul is motivated to go sell motor controllers. My stance to him is like, here's your objective, go fast. So it comes down to how fast can Paul scale motor controllers, like yet to be proven, right? So we have 3 customers today. If it's 50, we're not going to stop there. So I think the reality is, is that we've taken a weighted approach to how we're factoring that in and we're putting the gas -- we're putting the foot to the gas pedal.

For sure. And then you guys talked about the -- made the point today that the technology that you have is end market agnostic, right? I was just curious to hear maybe could you discuss what end markets you are in today where you could see yourself having a presence in the next 3 to 5 years?

So we've talked a lot about commercial nuclear, and I think we've missed a point. I'll talk about a few others as well. When we talk about commercial nuclear, I don't think, except for what Will mentioned, folks realize how real that is. Graham has provided 150 solutions and has had an end stamp of that business before in actual hardware. And so that's an example where we're going to be using this capability. I mean we're talking fabrication, precision, all these sort of same capabilities and just moving into an industry that's really taking off. When we talk about FlackTek, the opportunities that we're seeing right now are endless. And so we actually have to bound the opportunities. Examples, the thermal panels, like I mentioned, for an upper stage reentry vehicle, adherence. You then go into materials for roofing. Then you move to the next and you go to absolutely process-critical battery mixing for a company that you all would recognize driving the streets. These applications are transformational in terms of the end markets. What's happened is you sort of stick to what you know best. And so aerospace and defense and then energy and process has been our core domain expertise. But we're seeing applications like for FlackTek and pharmacy and very custom mixtures of pharmaceuticals. We're seeing it in a lot of different places. With Barber-Nichols, cryogenics, I think it's untapped. The reality is, is we used to talk about forced convection, which is basically air being blown across a thing to remove heat. Then we started talking about water. And where we're headed is we're going to be starting to talk more and more about cryogenics. And cryogenics, unlike air is hard. You don't just need a blower or a fan. You actually need a fluid plus a pump plus a really complex valving system. And so I believe as things get smaller and more complex, we will see applications for cryogenics being used. An example of that, I like going kind of nerdy for a second. So an example of that real life is when you think about ablation in medical, you have cryoablation that's used for both cancer treatment as well as for removing arrhythmia in the heart. Those 2 things actually use a cryogenic pump, and we're pursuing opportunities in that with the Scam pump down in Florida. And so my point being is, I think we can talk about some vectors and some differentiation, but it could even be broader should we create the scale of what it could really look like. So I think we're going to limit ourselves in growth rather than the need for the technology. It's actually really cool to have our analysts actually in front of us asking questions and the dialogue.

Maybe just on the defense business and coming back to the slide, a staple in your deck around the opportunity on existing programs, I think $1.8 billion. Would you have a wet finger guess as to what that number would be, including your current capabilities if you won other content that you could currently support?

It's a great question, and it can get lost in today's day. The news that we shared is a big deal. What I mean by it being a big deal is we have content on Virginia, Columbia, Ford Class. You can sort of infer the criticality of the equipment that we've been providing, condensers, air turbine pumps, et cetera. The air turbine pump that we're providing is on every asset. The condenser technology, we've referenced that it's not on every asset. With that, the content that we can provide insight to today is we're just touching the surface. We have to execute the product in front of us. So we're pretty confident in what's up there. We're also confident that it's a number north of what we presented. But what I'll say is we need to do it through execution. Today, we have 2 boats, which ends up being 4 condensers. And so we got to go execute. And so Russ, I'd love to give that forward-looking content. I think the reality is it's up to Will and his team to go make it happen.

And I think it's worth reiterating that, that $1.8 billion is at today's prices without any inflation or anything else taken into account. So that's at today's dollars.

This is Roger from Silvercrest. It seems like you guys could almost be spending more money because there's so much opportunity out in front of you to go get, especially if there's a lot of urgency from both the customer and you guys and suppliers to go capture what's right in front of you. So I'm curious how you balance and kind of prioritize when I'm guessing you've got half a dozen or a dozen different things that could all be high-return projects. So maybe just walk through that process.

Yes. So first of all, I'm the gas. Chris is the break. I just want to remind you of that. And the Board is the parking break if we need one. So I think we have a really good dynamic between those 3 parties. The reality is the business units I think that we will start losing our ability to deploy the capital successfully and disciplined to the plan that we have if we exceed that 10% number. What I also see happening is if there is something that has a greater than 20% ROIC, the answer is we're going to go do it. I think the challenge that we're inflecting into is it's not just going to be a CapEx conversation. You're starting to see the first instances where we put in the capital. We actually need to reinvest profitability through the P&L to start getting the people to go to the next level. And so we're getting to the point where it's -- there's different terms for it. There's an article where they call them bridgers, there's X factors, but there's these folks like Paul and like the person that's going to lead aftermarket that become the folks that own or empowered to go take that to the next level. And so I don't believe that it's the playbook to go deploy capital. I don't think it's the ideas to go deploy. I literally think it is the capacity of the leadership team to go do. And so that's why we have folks like we've added Keith in IT, gone super well since he's joined the team. Rachel, we're starting to stand up leadership development programs to both do internal and bring in external talent. So you're right. The answer is I don't actually like to drive fast, but the business. I think the team knows that I want to go fast. So it's good to hear that feedback. I'm hearing sort of an encouragement to continue. I think there's confidence to go continue. Anything to add from you?

I'm just -- yes, I would just address that by saying that's why we've consciously decided to spend $2.5 million next year on adding to the bench strength in order to pursue those opportunities, quite frankly. And we also thought it was a responsible number, right? My friends enduringly refer to me as the fund sponge, but sometimes it's a balanced approach, right? And I think we have a really good dynamic going on here, and it's a good problem to have, right? And we'll pursue it and not get over our skis.

Yes, Chris is actually walking home because the train was $3. So -- no, I'm just kidding. Other questions? And I appreciate the engagement. I mean, for us, today is a huge day. I wanted everyone to get to experience the leadership team. This team is ready to go. Every single one of us is committed. I think we're using the capital of the investors to the best capability that we have. Bobby?

I just wanted to ask on -- obviously, you have a great foothold with the U.S. Navy. Just wanted to maybe touch -- and you talked about expanding internationally and it's not an or, it's and, right? Could you maybe just double-click on expanding defense to non-U.S. Navy partners? Because it would seem like your solutions make sense for other folks. And maybe that ties into the -- taking one solution for one customer and doing it to.

Let me decompose that just slightly. So the global strategy that we discussed today, we're already doing it today, but we're going to intend to take it to the next level. And so this idea of doubling down in areas that provide growth is really the focus. The majority of that will be in the energy and process business. But someday, like you're seeing Korean shipbuilding is a talk, you're seeing other things. We want to ensure that we have fabrication capability globally. With that, if you then focus in on -- so the short summary of that is the globalization expansion strategy is most focused around energy and process. That's takeaway one. Takeaway two, within defense, we are seeing opportunity to expand that footprint. So today, we mostly talk about the Navy. Mike actually went through several opportunities today that don't have to do with the Navy, some of them with the Army and other folks with radar platforms, directed energy, et cetera. With that, as you then zoom into the defense, we are providing solutions today internationally. Air turbine pumps are actually being provided to our allies across the world, U.K., Australia, et cetera. Mark 48 torpedoes are shipped to foreign military. I can't get into the specifics of who and why and where. We're talking about AUKUS, which is an extension of the submarine building platform where they're actually talking about getting 2 in-service Virginia-class units. So I think we'll be a natural extension. And what I will say is I also believe today we'll be a little bit reactive to that demand and be following our customers. So I don't want to sort of overextend. There's opportunity there. What we are seeing uniquely different, FlackTek, commercially available product, energetic focused. We're also seeing aerospace and defense focus, space focus. Well, it's an EAR99 product. And if its end use is disclosed within our capability, we can ship those assets wherever we want. Of course, we have to take it through the trades and ensure that it's compliant. But we're seeing a lot of global demand for that capability.

And then a question on FlackTek. I think it was mentioned that already saw a couple of near-term wins under the Graham umbrella since it joined. I was just curious to hear maybe how were those wins accelerated being under your umbrella? And like if so, what were the drivers of them being underneath you seeing accelerated wins?

Yes. So I'm going to keep it pretty black and white. I'm just going to tell you all the specifics to just get it out there today. The first is we've hired the entire team. In the back, Ted Hollywood, he's going to be selling the mega. We hired a Global Sales Director that's Ted's right-hand person that's going to be ensuring that the team is executing with cadence and rhythm and ensuring that the rigor is there. We've hired an HR leader that was all outsourced so that we can actually recruit the folks that are going to build the brand with Matt. We've hired an outbound salesperson that is going to be taking the technology from a completely inbound to an outbound strategy. He has experience, precision and knowledge of how to go do that. And so the first was we just had to build the team. The second thing -- and oh, by the way, that's not a win yet. That will be a win. The wins truthfully have come from twofold, just closing the deals that were in the pipeline, big opportunities I can't get into the exact specifics, but the ability to support the energetics portfolio and service, the ability to provide consumables and new machines for a launch asset that I've talked about a few times today. These FlackTek, they might not be used on the rocket, but they're actually staged the entire way up the launch tower, and that's to be able to fill gaps on these sort of systems that are launching. So I won't get into all the details, Bobby, but the short of it is, is a really capable team that's hungry to go do it that fits the culture of Graham. Two, I use this with Matt all the time. We've given him the business confidence to go do this. He's paid all of his vendors. He's got investment in critical activities to move forward in terms of people, processes and tools, and he secured some key opportunities that were in the pipeline for a while.

That's great to hear. And then kind of following up on that, I thought something that was interesting was that FlackTek started with the mega right is just rolling out, and that's more for production. And they've had a ton of customers right across 40 end markets that have used the smaller ones. So I was just curious of like, is that part of that outbound sales process of now reengaging those customers who might have been using FlackTek just on like a pilot small scale and then saying, "Hey, now we have this new one"?

Oh, yes. More of that. So -- we have what we're calling key account partners. And so key account partners are going into the folks that we established as sort of the, let's say, top 20. That's one. Two, the mega is a collaborative sale. You don't just pop this thing in a factory and hope it works. Like you have to be integral to the process, you have to help them develop their process. You have to ensure it fits within their ecosystem to really -- to extract the value from that capability. And so what I would sort of have you as the takeaway is it's a pretty comprehensive approach to how we're looking at that. It's just not -- it's not a simple just go to play these assets. And I want to keep saying it because once again, I'm as much reminding my team as telling the world, we are still going to be really good at what we do today. So small, medium and large, we sell a lot of them, and we're going to keep selling those as well.

But to your point, Bobby, it is a new technology. And what we have found is that, yes, someone will purchase a medium and they'll see how it works. And then they'll say, "Oh, this really does work. We refer to it as a FlackTek look. They don't necessarily believe it right out the gate, but then they'll buy a medium. And then now they're moving up upgrading to a large. And then the plan is to then, yes, get them to upgrade to a Meggitt someday.

And then I think maybe just for context, like those -- the mega ones aren't those like pretty pricey.

Well, in our boat, price is all relative, okay? So based on a return on investment, they're a seal. The reality is, yes, they go for a higher price that has improved margins. But if you look from an ROI perspective, the reason why we're not talking price with these customers is because they're generating a tremendous amount of value. When you talk about the mega that's in Andrel's factory, it's running their entire Energetics factory. And I can't get into production, et cetera, type numbers, but you then just look at what it's enabling, the capital investment is not a huge deal.

For sure. It's a really exciting story.

So with that, thank you all for today. I know that it's been a hassle to get here. We're grateful for all of you being here. A lot of familiar faces for us. We're really, I would just say, energized and committed to the strategy. My #1 takeaway, you have 750 employees that own this company that are going to make the best extraction of this value over the next 3 years. So I appreciate you joining us today, and we'll get back to running the business. Thank you.