Graham Corporation (NYSE:GHM) Q1 2026 Earnings Call Transcript

Graham Corporation (NYSE:GHM) Q1 2026 Earnings Call Transcript August 5, 2025

Graham Corporation beats earnings expectations. Reported EPS is $0.45, expectations were $0.25.

Operator: Good day, and welcome to Graham Corporation First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Tom Cook, Investor Relations. Please go ahead.

Tom Cook: Thank you, and good morning, everyone. Welcome to Graham’s Fiscal First Quarter 2026 Earnings Call. With me on the call today are Matt Malone, President and Chief Executive Officer; and Chris Thome, Chief Financial Officer. This morning, we released our financial results. Our earnings release and accompanying presentation for today’s call are available on our website at ir.grahamcorp.com. You should be aware that we may make forward-looking statements during the formal discussion as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release as well as with other documents that are filed by the company with the Securities and Exchange Commission.

You can find these documents on our website or at sec.gov. During today’s call, we will also discuss non-GAAP financial measures. We believe these will be useful in evaluating our performance. However, you should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today’s release and slides. We also use key performance indicators to help gauge the progress and performance of the company. These key performance metrics are ROIC, orders, backlog and book-to-bill ratio. These are operational measures and a quantitative reconciliation of each is not required or provided.

You can find a disclaimer regarding our use of KPIs at the back of today’s presentation. So with that, if you’ll please advance to Slide 3, I’ll turn it over to Matt to begin. Matt?

Matthew J. Malone: Thank you, Tom. Good morning, and welcome, everyone, to our first quarter fiscal year 2026 earnings call. I’m pleased with our strong results to start the fiscal 2026, demonstrating the strength of our diversified product portfolio and strategic positioning. Revenue increased 11% to $55.5 million, reflecting continued performance across our key markets. This growth was driven by increased sales in our energy and process markets, particularly by refining, petrochemical and new energy, along with strong aftermarket performance that was 33% higher than the prior year. Adjusted EBITDA increased 33% year-over-year to $6.8 million or a 12.3% increase or percentage of sales. These results reflect our continued focus on operational excellence and exceptional commitment by our team.

We also received — or achieved a strong book-to-bill ratio of 2.3x, driven by our — driving our backlog to a company record of $482.9 million, a 22% increase over the prior year. This robust backlog provides excellent visibility into our business with approximately 35% to 40% expected to convert to revenue over the next 12 months. On the defense side, we continue to see strong momentum with our U.S. Navy programs. We recently announced a $25.5 million follow-on order to produce mission-critical hardware for the MK48 Mod 7 heavyweight torpedo program in July. This is in addition to the $136.5 million follow-on contract we were awarded to support the U.S. Navy’s Virginia-class submarine program. These awards reaffirm our position as a trusted supplier to the U.S. Navy and provide stable reoccurring revenue streams as well as strong visibility into our future revenue.

I’m also pleased to remind you of our continued success in securing strategic partnerships and funding. In May, we announced a $2.2 million strategic investment from a key defence customer to advance our critical weld evaluation capabilities for the Columbia and Virginia-class submarine programs. Combined with Graham’s $1.4 million contribution, this represents a total $3.6 million project investment. This latest funding adds to our strong track record of partner investments, which includes a substantial $13.5 million investment supporting our capacity expansion efforts and a $2.1 million Blue Forge Alliance grant that enabled us to expand both our welder training programs and equipment capabilities. These strategic partnerships demonstrate the confidence our customers and partners have in our technology and market position.

Moving to Energy and Process. We saw favorable mix in the quarter across our diversified product portfolio, with aftermarket sales remaining robust and increased activity in our new energy side of the business. We are seeing a lot of momentum and opportunities in the small modular nuclear reactors and cryogenics, where we are seeing increased interest in our mission-critical technologies. We’re also advancing innovations like our next-gen nozzle for vacuum distillation towers that we mentioned in previous quarters. Overall, the underlying demand remains strong, though timing has become more uncertain on the larger global capital projects. In our Space segment, we continue to see excellent traction. The launch market is gaining momentum and our specialized applications are performing exceptionally well, demonstrating the strong underlying demand in this sector.

We are currently executing several low- rate production programs that have long-term scale opportunity. Our full product life cycle approach, including design, manufacturing and test is proving effective with our space pipeline strong as ever. We remain optimistic our growth prospects in this dynamic environment. Turning to our operational initiatives on Slide 4. I’m pleased to report that the strategic capital investments remain on schedule and budget. We received our certificate of occupancy in July for the 30,000 square foot Batavia manufacturing facility to support the U.S. Navy. Also, this will come on — we expect this to be fully operational by the end of calendar year Q3. This facility featured enhances capabilities through automated welding, optimized product flow and advanced machining to accelerate throughput to meet the rising demand that we’re seeing on the several Navy platforms.

To that point, we have completed the installation of our 6 automated welding machines and calibration is complete. Our new cryogenic propellant testing facility in Florida is also progressing well with the liquid oxygen tank now being now installed and the facility expected to be operational this quarter and begin to generate return this fiscal year. Moving to our internal operations. Our ERP system implementation in Batavia continues to progress, which we expect to come online by the end of calendar year 2025. This system will reap immediate benefits for Graham by streamlining workflows, improving transactional efficiency and standardizing cross-functional communications. These investments are targeting returns on investment exceeding 20% and many of these cross-functional and scalable initiatives from automated welding and expanded R&D to workforce training will position us for future growth across all our markets.

Moving to M&A. We continue to see a strong pipeline of acquisition opportunities that align with our strategic initiatives and remain focused on pursuing opportunities that offer risk-adjusted returns and can help us accelerate our product life cycle strategy. Our M&A growth criteria is laid out on Slide 14 from our earnings deck, where we expect opportunistic acquisitions to supplement organic growth of 8% to 10%. In closing, our first fiscal quarter demonstrates strong results, continued business momentum across our diversified portfolio. With our record backlog, strategic investments coming online and strong market positioning, we’re well positioned to capitalize on the opportunities that lie ahead. The foundation we’ve built over the past several years is enabling us to deliver consistent results while positioning Graham to achieve sustainable long-term growth and our fiscal 2027 targets of 8% to 10% organic revenue growth per year and low to mid-teen adjusted EBITDA margins as we transition from our improved phase to our growth phase.

I am incredibly proud of the team we’ve built and our intense focus on winning together to deliver unparalleled solutions for our customers in new and exciting ways. We are just getting started. With that, I’ll turn it over to Chris to review the financial results. Chris?

Christopher J. Thome: Thanks, Matt, and good morning, everyone. I will begin my review of results on Slide 5. For the first quarter of fiscal 2026, sales were $55.5 million, an increase of 11% compared to the prior year, reflecting strength across our diversified portfolio and was consistent with our expectations and guidance for the year. Sales to the energy and process market increased by $5.7 million, driven by commercial projects in chemical, petrochemical as well as momentum in new energy markets, including hydrogen and SMRs. Aftermarket sales to the energy and process and defense markets were $10.4 million, up 33% from the prior year, with demand in these areas remaining robust. Turning to Slide 6. Gross profit increased 19% to $14.7 million, with gross margin expanding 170 basis points to 26.5% compared to the prior year.

This improvement was driven by higher volume and improved sales mix, which included a higher level of aftermarket work and better execution and pricing. For the first quarter of fiscal 2026, the impact of tariffs was not material to our consolidated financial statements. However, the situation remains fluid, and we continue to actively monitor the impact that tariffs will have on our business. Given our network of in-country subcontractors that we have established over the last decade as well as favorable contract terms that we have built into our contracts to protect ourselves, we estimate the range of potential impact of increased tariffs for the full year to only be between $2 million and $5 million. On Slide 7, you can see how the strong operational performance translated to the bottom line.

Net income for the quarter was $4.6 million or $0.42 per diluted share, up 56% compared with the $0.27 per diluted share in the prior year. Adjusted net income was $4.9 million or $0.45 per diluted share, a 36% increase year-over-year. Similarly, adjusted EBITDA was $6.8 million for the quarter, up 33% from last year, with adjusted EBITDA margin improving 200 basis points to 12.3%. As a reminder, the Barber-Nichols earnout bonus will phase out by the end of fiscal 2026. With this program behind us, we remain confident in our ability to achieve our fiscal 2027 goal of low to mid-teen adjusted EBITDA margins. Moving to Slide 8. We saw record order demand this quarter. Orders totaled $126 million, primarily reflecting the remaining $86.5 million of a $136.5 million total contract value follow-on order for the Virginia-class submarine program that we announced in May.

Additionally, aftermarket orders for the energy and process and defense markets remained strong, totaling $10.5 million in the quarter, up 16% over the prior year. The resulting book-to-bill ratio was 2.3x for the quarter, driving backlog to a record of $483 million, up 22% year-over-year. Approximately 87% of this backlog is for the defense industry, with 35% to 40% expected to convert to revenue over the next 12 months. I should point out that our orders tend to be lumpy given the nature of our business and in particular, orders to the defense industry, which span multiple years and can be significantly larger in size. Over the long term, our goal is to have a book-to-bill ratio of 1.1x, which can vary significantly from quarter-to-quarter given the nature of our business.

Turning to Slide 9. You can see our balance sheet and liquidity position remains strong. We ended the quarter with $10.8 million in cash and no debt, with $44.3 million available on our revolver. As expected, cash used in operations was $2.3 million in the quarter, driven by fiscal 2025 bonus payments, which included the Barber-Nichols supplemental earn-out bonus of $4.3 million. Capital expenditures were $7 million in the quarter, focused on capacity expansion, radiographic testing, cryogenic testing and productivity enhancements. All major projects remain on time and are expected to generate returns above 20%. Turning to guidance on Slide 10. Based upon the strong results for the first quarter as well as our expectations for the remainder of the fiscal year, we are reiterating our full year fiscal 2026 outlook, which reflects continued momentum in our markets and early benefits from our high-return capital investments.

The midpoint of that guidance implies 10% revenue growth and 12% adjusted EBITDA growth. All in all, the first quarter of fiscal 2026 was a strong quarter that was consistent with our expectations and guidance. Not only were we able to achieve strong revenue growth, order volume and record backlog, but we also made great progress on the numerous strategic investments we are making in our company. It is these investments, along with the continued momentum that is building within our company that gives us confidence we are on track to achieving our fiscal 2027 targets of 8% to 10% organic revenue growth per year and low to mid-teen adjusted EBITDA margins. With that, we can now open the call for questions.

Q&A Session

Operator: [Operator Instructions] The first question comes from the line of Russell Stanley with Beacon Securities.

Russell Stanley: My first just around the EBITDA margins and excluding the Barber-Nichols bonus, looking at margins for the quarter, up over 14%, the same prior quarter. you’re closing in on the high end of that target you set for fiscal ’27. And understanding there will be some quarter-to-quarter variability. I’m just wondering, is there anything you’d call out in the quarter as being unsustainable. You’ve outlined a few items there. The aftermarket sales are particularly strong. Tariff impacts still to come are still fluid. But just wondering, is there any other particular headwinds that you see in the way?

Matthew J. Malone: Yes. Thanks for the question, Russ. Yes, there was nothing unusual about the current quarter that we can exclude. But as you know, we reiterated our guidance and did not change it. We did have a very high mix of aftermarket, as you pointed out, aftermarket sales were 20% in the quarter versus 15% last year. And that drove that as well as other favorable mix drove our margins higher than the range that we provided. So we would expect to get to a more normalized level for the remainder of the year and be within our guidance that we set out at the beginning of the year.

Russell Stanley: Great. And maybe just on the aftermarket sales and understanding, I guess, traditionally, that’s been more of an energy and process business, but you called out defense contributing in the quarter. Just wondering what you can say as to the opportunity there in the aftermarket and the potential for growth.

Matthew J. Malone: Yes. Russ, great question. We’re seeing a lot of favorability and opportunity on the fleet maintenance side. So as you hear about Columbia, Virginia pushing out and not getting additional submarines to the fleet, we’re seeing opportunities to repair existing assets that are in the field. And so we currently have in the Colorado facility, a pretty extensive overhaul facility, which was just modernized and brought online to upgrade these assets to be — to go from 30 years of use to essentially new and fit for service. So that side is filled and moving forward. So that’s where you see the aftermarket opportunity. The other that I’ll just briefly touch on is spare support on the torpedo programs. We’re seeing quite a bit of opportunity where there’s the need to keep these assets up and running. And so we’re getting a number of inquiries from the depots to provide spare parts in the aftermarket to the depots for overhaul.

Russell Stanley: Great. Maybe if I could sneak in one last question and get back in the queue. The order you announced last week to support the Torpito program. I just wanted to clarify, did any of that land in orders for Q1? Or does all of that fall into Q2? I ask given the way the big order at the end of May was sped up.

Matthew J. Malone: Yes. No, Russ, that whole order will be in Q2. That was subsequent to quarter end that we definitized that. So it will be in the second quarter.

Operator: Next question comes from the line of Bobby Brooks with Northland Capital Markets.

Robert Brooks: So you guys mentioned how you’re seeing increasing momentum in small nuclear reactors. Could you maybe remind us what products you’re providing to the space and maybe just expand a bit more to help sort of quantify that momentum?

Matthew J. Malone: Yes. So Bobby, as you read, the small modular nuclear space is ramping up. I’ll say it’s in the early development phases. We’re starting to see Idaho National Labs start to bring back online the dome for testing for some of these — the scope that is being supplied by Graham and specifically Barber-Nichols and P3 is in regards to the helium circulator and/or molten salt pumps that are utilized on these small modular nuclear systems. Additional scope that long term, we intend to supply would be the supercritical CO2 machine that converts the heat source to electrical on the backside of the process. With that being said, this is a slow ramp over the next, I would say, number of years, and we’re in the very much the development phase.

So it makes up a very small percentage of the business today, but we see significant growth opportunity. And we continue to see additional inquiries in the pipeline of small businesses that are starting to enter in this arena in addition to what are the platform businesses that we’re working with today.

Robert Brooks: Awesome. Excellent color there. And then just circling back on gross margins. That was a key highlight for myself on the quarter with that being with the 26.5% being the highest level you guys have seen since taking over the business in 2021. Obviously, I feel like that’s in part to several different margin enhancement initiatives you have going on. But I was just curious if you could sort of rank order which initiatives were the largest benefit in the quarter? Or maybe I’m overthinking it, and it’s just as simple as the higher aftermarket mix that you guys have called out.

Matthew J. Malone: Yes, Bobby, that would be the #1 call out would be the higher percentage of aftermarket business. Additionally, for the remainder of the year, we expect some higher level of material receipts, which typically carry a lower margin with them. So that could bring the margins down a little bit for the remainder of the year. again, still feel very comfortable about our 24.5% to 25.5% guidance that we gave for the year.

Robert Brooks: Got it. And then just kind of following up on that. Obviously, your gross margins are unchanged. But I feel like is there going to be — is there some sort of shift that you’re anticipating with less aftermarket sales going forward? Because I would assume that’s probably the case because you have a handful of other margin enhancement initiatives that are set to complete in your fiscal year ’26. So maybe just help me understand the logic of not raising the gross margin guidance after these strong results.

Matthew J. Malone: Sure. Well, as you know, one quarter doesn’t make a year. So don’t want to really move off guidance that we just gave a month ago. Aftermarket sales were up 33% in the quarter. So certainly, we wouldn’t expect that level of growth year-over-year to continue. And as I did mention, we do have some lower-margin work that’s going to be coming through our P&L later in the year, which would bring that down a little bit.

Operator: Next question comes from the line of Joe Gomes with NOBLE Capital.

Joseph Anthony Gomes: On the quarter. I wanted to turn to the space segment for a minute, Matt, you talked about some excellent traction there and some programs that are low rate that could potentially move to higher production levels. But if we look at the orders from that — in that market and the backlog of the market, it’s not showing, I guess, the level of excitement that seem to be coming across from you. And just wondering if you could walk us through a little bit more where you actually see that space market and when we could start to maybe see this really take off.

Matthew J. Malone: Yes. Yes. So I think a few things to characterize with the space market just in context for the conversation. So we’ve had a dominant player in the United States for launch for the last number of years. We’re starting to see some additional competitive launch opportunities come into the market, and you can sort of look at who those players are. With those next-generation assets coming, the Barber-Nichols team and P3 team have some critical assets that are on board those rockets. With that being said, the additional aspect is once you get reliable launch capability, then you have the deploying of assets into space like satellites and others. And so Joe, I think there’s a twofold thing. We’re starting to see the low rate production materialize on some of the additional launch providers, which we have critical content on.

So we’re seeing some scale there, and I think we’ll see it continue to nurture through the pipeline. The other side that we’re seeing is the what to do in space really picking up. And that’s value-based. That’s — as we mentioned, the oxygen fan for the astronaut backpack that we’re working on. That’s in its low-rate infancy development phase, which is scaling. We’re also seeing some satellite cooling systems scale. So we’re in the early phases of the competitive platforms coming online for launch and then they’re launching assets that have rotating machines that are provided by both Barber-Nichols and P3. So a little bit long-winded to say we’re seeing scale, but it’s in the early phases still. And so Joe, yes, I think it’s maybe a little preemptive.

Also, what I’ll say is we’re just bringing online. I announced the cryogenic facility and the liquid oxygen tank coming online. We’re starting to see incredible interest for that facility in twofolds of it, exactly what we originally pitched, which is our customers coming to us saying, “Hey, look, can you test our assets in your facility? And two is, we’d like to move forward with you as the provider because you have this capability to validate your product. So we’re seeing the two conversations unfold with respect to that facility. So give some color on space, but yes, a lot of traction and excitement.

Joseph Anthony Gomes: Okay. And on the given where you are on the facility, Thyigetic facility, can you — do you have any kind of sense of what that might be — start generating in revenue and when?

Matthew J. Malone: Yes. So I think we’ll start talking about that probably next quarter. First and foremost is ensuring that the facility gets completed and is, of course, execution safe. So we’re going through all the procedures now, all the protocols for safety, and then we’ll actually start by testing one of our internal products that has already been validated through oxygen and hydrogen testing just to confirm consistent results. Once we deem safe, we are actively in conversations with customers today about starting to fill that — starting to fill the backlog in that facility. And so we expect to disclose further in the next quarter.

Joseph Anthony Gomes: Okay. And one last one for me. A lot of growth here with a lot of large award announcements, some of the details you provided today. Any kind of restrictions in terms of hiring of people that you’re not finding the availability or the proper skills? Anything there that could limit the growth here in the near term?

Matthew J. Malone: Yes. Thanks, Joe. I sound like a broken record here quarter after quarter, but our HR teams continue to do a great job recruiting. As you know, we have the welder training program as well as other programs in place to bring people in. Our direct labor force was up 10% year-over-year. So at this point, we see great supply of workers. And I would say that the market for new employees has softened a little bit as well. So that helps us.

Operator: Next question comes from the line of Tony Bancroft with Gabelli Funds.

Tony Bancroft: Congratulations on the great quarter. Just in regards to the Wall Street Journal article this week, which I think you alluded to a little earlier in a question, you’re seeing all these dry docks building up, and you talked about the extra work you’re getting from that. How do you see this issue? I know the President has talked about an initiative, but playing out over the next 5 years. And how is Graham going to compete in that space and maybe grow in that space? Or is there something maybe transformative that Graham would want to do since we essentially have unconstrained secular demand?

Matthew J. Malone: Yes, Tony, thanks for the warm regards. And this is a complicated one, but I’ll talk to it in a little bit of color. So how we look at it is First, you got to execute on the programs that you have in your backlog period. If you can’t execute, you can’t talk about the future opportunities. We are doing that across the defense platform, which is important for securing additional work. The second is we are showing internal investment to support these fleet modernization activities. And I’d say we’re thinking creatively. So we’re not just bringing the old take the same solution for the same application. We’re not only delivering that same product in kind, but we’re also upgrading where appropriate to enhance speed and speed has been a key focus to get back to the fleet.

What then happens is you continue to bring on capacity and you drive efficiency in your operations, which gives you opportunity for bandwidth to absorb additional work. And that’s where Dan Thorn comes in with the business development side with the team at both locations. And so what that really looks like is now you can start saying we have this capability and capacity in these locations, and you can start to augment that with the needs of the — both our customers and the Navy. And so that’s the phase where we’re at right now. We’re well down this path, but it starts with execution, then it starts with efficiency and then it drives filling capacity.

Operator: Next question comes from the line of Tate Sullivan with Maxim Group.

Tate H. Sullivan: Just a follow-up question for the torpedo work. Can you talk about the potential length of the most recent torpedo order in terms of years? Does it accompany the length with work on Columbia class and Virginia-class submarines? Or is it much shorter, please?

Matthew J. Malone: Yes. So I’ll break it up. The $136.5 million order is specific to Virginia-class. It extends out through the mid-2030s. The program that was recently announced that will be booked in Q2, which is the Mark 48 torpedo program, that is a single option year. So that meets the demand of this year. We have 3 additional option years on that contract. and then there’s opportunity for an additional block thereafter. So quite a bit of runway on those programs, and we’re seeing heightened demand.

Tate H. Sullivan: Okay. And then within the backlog of $418 million for defense, does the submarine-related work and the torpedo work take up the majority of that number, please? And if not, what do you want to highlight some of the other orders in that backlog number?

Matthew J. Malone: No, Tony, that is the bulk of what’s in there. We do have a little bit left on CVN 81, but the bulk of that is related to the torpedoes and the submarine programs.

Operator: Next question comes from the line of John Bair with Ascend Wealth Advisors.

John H. Bair: Having followed Graham for many years, and you allude almost every quarter about the lumpiness of order awards, sort of like a bow constrictor. And so I guess the question is, looking out there, what do you see as being the potential award pipeline projects and so forth that you can bid on and potentially win to continue to maintain or increase the — your backlogs?

Matthew J. Malone: Yes. Thanks. It’s a twofold question — or it’s a twofold answer. The first is think of your sort of large lumpy programs, as mentioned, which is we’re pursuing additional torpedo programs that are both restart and new production. as examples. And those would be somewhat lumpy in nature. In parallel to those large programs, we are also seeking to level out some of the commercial portion of the business. So an example of that is I announced we’re working on a, I’ll say, an aftermarket acceleration to make it more of a proactive process or pursuit for preventative maintenance as opposed to reactive pick up the phone. And that will really layer in sort of a reoccurring revenue at high margin. And so we’re looking at it twofold. The first is large big programs that tend to be lumpy and two is increasing our value extraction on more of the reoccurring revenue side.

John H. Bair: Okay. And I know in the past, you also talked about looking at all the installed base that you’ve had in petrochemical refining areas and trying to be more proactive in reaching out to those markets. Where are you on that? And how has that been coming along?

Matthew J. Malone: Yes. So we’re right in the middle of it. Actually, the sales team has huddled right across the wall from us right now crafting through that strategy. It’s going quite well. We’ve engaged some of our legacy employees that have been quite connected with our customer base for quite some time. They’re leading some of the charge on that connection and then interfacing with the customers to bring new value. An example of that is with the next-generation nozzle, which we’ve identified I’ll say, multiple handfuls of customers that are coming up on turnarounds that we could deploy that solution to. In parallel with that, we’re working on additional R&D scope to further enhance that portfolio. So today, it’s for a single nozzle type, and we’re looking to expand that offering to all of the nozzles in the portfolio.

On the acceleration side, so we’ve actually engaged a third party that’s working with us on artificial intelligence and basically going from RFQ from our customer to quick quote turnaround, reducing that from a matter of weeks to even minutes or days. And so we’re underway with that kickoff and started down that process. Then what we’re doing is we’re proactively mapping the installed base to drive connection with them and then return value and go proactively rather than waiting for the phone to ring. So all that to be said, we’re right in the thick of it. We’re not seeing the returns from that investment yet just because in the early phases, but we can see how it’s going to shape up.

John H. Bair: Congratulations. And that was a good quarter. And as usual, market looks otherwise, but temporary.

Operator: Next question comes from the line of Gary Schwab with Valley Forge Capital Management.

Gary Schwab: Can you just put a little more color on the tariffs and that $2 million to $5 million hit possibility? And if there’s any way to partially mitigate some of that tariff through price adjustments?

Matthew J. Malone: Yes, sure. So a lot of that impact comes from our purchasing of raw materials overseas. We — it also comes from selling to some of our foreign customers out from the U.S. But as I mentioned in our — my comments today, we have an extensive network of in-country manufacturing partners. So in order to avoid some of those tariffs, we have them fulfill, I would say, the more commoditized portions of the orders, and we maintain manufacturing of the more IP-oriented natures of our projects. So additionally, we also have put into our contracts favorable Incoterms and equitable adjustment clauses that helps protect us from any kind of impact from the tariffs. So as I mentioned in today’s comments, the first quarter, we didn’t see a material impact, but we do continue to actively monitor the impact of tariffs as it’s a fluid situation, as you know.

Operator: Next question comes from the line of Bobby Brooks with Northland Capital Markets.

Robert Brooks: Just one follow-up for me. I just wanted to circle back. The business is growing excellently domestically, but I was just curious to hear about how you guys are thinking about growing the business internationally. It seems like that could be a really compelling opportunity. Maybe what — talk about what the strategy is now and possibly contrast that versus what it was maybe 2 or 3 years ago?

Matthew J. Malone: Yes. Great question. It’s evolving quickly. As you see, I’ll sort of break it up into a few segments, Bobby. The first is, if you think about China, — we were very much using a China for a larger portfolio several years ago. Today, we’re basically using China for China. And that’s a strategy that we see moving forward. We have a large installed base in China, and we expect that to continue with some of the pipeline, but we will supply that from China for China. Where we see a lot of opportunity and continued investment from our side is both in India for India. So a nationalistic approach in India. We’ve had a long-standing footprint there. We have an international director that’s been in that business for about a year now, who’s done a fantastic job scaling the team and creating critical supply connections.

And we’re looking to use India to serve a larger portion of the world as well with competitive pricing, and we’re proving out that strategy now. So I think you can continue to see emphasis and growth with our international strategy. And today, what we’re seeing is there’s been a lot of dormancy just in terms of orders, haven’t lost any, but also haven’t booked any large. And we’re starting to see that continue to progress forward, and we’re seeing big jobs globally start to have some feet behind them, some momentum behind them. So I think we’ll see those mature over the next quarter.

Operator: Mr. Brooks, are you done with the question?

Robert Brooks: Yes. Yes. I thought I was going to turn it off the queue.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Matthew Malone for closing remarks.

Matthew J. Malone: Okay. Thank you, Renju. We are pleased with our results today and look forward to keeping you updated on our progress. As always, please reach out with any questions. Thank you, everyone, for joining us today and your interest in Graham.

Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.