Singular Research Conference Singular Research Conference Jeffrey - PowerPoint PPT Presentation

Singular Research Conference Singular Research Conference Jeffrey Glajch, Vice President & CFO September 10, 2009

Safe Harbor Statement Regarding Forward Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks, uncertainties and assumptions and can be identified by words such as “expects,” “estimates,” “projects,” “anticipates,” “believes,” “could,” and other similar words and expressions. All statements addressing operating performance, events, or developments that Graham expects or anticipates will occur in the future, including but not limited to, statements relating to anticipated revenues, profit margins, foreign operations, Graham’s strategy to build its global sales representative channel, the effectiveness of automation in expanding Graham’s engineering capacity, representative channel, the effectiveness of automation in expanding Graham s engineering capacity, Graham’s ability to improve its cost competitiveness, customer preferences, changes in market conditions in the industries in which Graham operates, changes in general economic conditions and customer behavior and Graham’s acquisition strategy are forward-looking statements. Because they are forward-looking, they should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described in Graham's most recent Annual and Quarterly Reports filed with the Securities and Exchange Commission, included under the heading entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of Graham's underlying assumptions prove incorrect, actual results may vary materially from those y g p p y y y currently anticipated. Undue reliance should not be placed on Graham's forward-looking statements. Except as required by law, Graham disclaims any obligation to update or publicly announce any revisions to any of its forward-looking statements.

Our Vision Our goal is to be a Our goal is to be a world leader in the design world leader in the design o d eade o d eade t e des g t e des g and manufacture of and manufacture of ENGINEERED - TO TO - ORDER ENGINEERED ORDER products for the products for the ENERGY ENERGY MARKETS MARKETS

Graham Corporation Founded: 1936; IPO: 1968 ; NYSE Amex: GHM $12.92 Common shares outstanding 9.8 million Market capitalization $ $127 million 52-week price range $42.66 – $6.85 Avg. daily trading volume (12 mos.) 237,557 Stock splits: 1/2/2008 ► 5 for 4 ► 2 for 1 10/7/2008 Ownership: ► Institutional 52.5% ► Insider 2.9% Note: Market data as of September 2, 2009; ownership as of most recent filing.

P Products d t Condensers 26% 26% Ejectors 40% Heat Exchangers 9% Pumps 6% U.S. 51% Aftermarket 19% International 49% Note: Percent of Q1 FY2010 revenue.

Ejector system lowers the pressure in the Refinery Ejector System distillation column to allow crude oil to boil at a lower temperature. This allows CNOOC Huizhou Refinery–China for more efficient and cost-effective separation of crude oil into valuable 240,000 BBL/day refinery products, such as diesel, gas oils, kerosene, and other fuels. kerosene, and other fuels. An ejector system is a combination of ejectors and condensers connected in series. condensers connected in series. Graham provides the ejectors and condensers as components. Condensers Ejectors Graham Corporation, 2009

Di Diversified Markets ifi d M k t Chemical Processing 27% Other Industrial & Industrial & 22% 22% 46% 46% Refining R fi i Commercial Applications 5% Power Note: Percent of FY2010 revenue.

C lti Cultivate Diverse Markets t Di M k t OIL REFINING OIL REFINING CHEMICAL PROCESSING CHEMICAL PROCESSING � Conventional crude oil � Ethylene glycol � Ethylene � Oil sands � Detergent alcohols � Ammonia � Extra-heavy crude oil Extra heavy crude oil � Plastics, resins, fibers Plastics, resins, fibers � Nitrogen � Nitrogen � Sour crude � Coal-to-liquids (CTL) � Methanol � Lube oil � Gas-to-liquids (GTL) � Styrene � Polystyrene POWER GENERATION OTHER APPLICATIONS � Edible oil/Oleochemicals � Cogeneration � Biofuels: Biofuels: � Waste to energy � Waste-to-energy � Ethanol � Heat, power and light � Biodiesel � Geothermal � HVAC � Nuclear � Industrial gases � Industrial gases � In-situ I it � Cryogenic

Di ersified Geographies & Ind stries Diversified Geographies & Industries 2009 Orders $34 million Refineries South Korea, China, Bahrain, Oman, South America, USA $20 million Petrochemical China, North Africa, Trinidad & Tobago, Mexico USA Mexico, USA $4 million Power generation Turkey, USA $16 $16 million illi Edibl Edible oil, HVAC, oil il HVAC il USA USA production, government, industrial gases, OEM

Global Distillation Capacity Growth Global Distillation Capacity Growth (through 2015) Total Net Growth: 6 mb/d Total Net Growth: 6 mb/d Russia Europe: and 0.2 mb/d Eastern Europe: Europe: US & 0.2 mb/d Canada: 0.9 mb/d Asia- Pacific: 2.9 mb/d Latin America & Africa: Middle 0.3 mb/d East: 1.3 mb/d Africa: 0.4mb/d mb/d = million barrels per day Source: OPEC World Oil Outlook 2009

North American Competition C Market Market GHM GHM Competitors Competitors Market Share Refining vacuum distillation Refining vacuum distillation ~ 75% 75% Gardner Denver Gardner Denver Chemicals/Petrochemicals ~ 25% Croll Reynolds; Schutte Koerting; Gardner Denver Turbomachinery OEM – refining Turbomachinery OEM refining, ~ 50% 50% Ambassador; Yuba; Kreuger Ambassador; Yuba; Kreuger petrochemical Turbomachinery OEM – power and ~ 15% Holtec; Babcock; Thermal power producer Engineering; Yuba; Krueger HVAC ~ 10% Alfa Laval; APV; ITT; Ambassador

International Competition C Market Market GHM GHM Competitors Competitors Market Share Refining vacuum distillation g ~ 35 to 50% Gardner Denver; GEA Jet Pump; ; p; Korting Hannover; Edwards Chemicals/Petrochemicals ~ 25% Croll Reynolds; Schutte Koerting; Gardner Denver; GEA Jet Pump; K Korting Hannover; Edwards ti H Ed d Turbomachinery OEM – refining, ~ 50% Donghwa-Entec; Bumwoo; petrochemical Oiltechnik; Kreuger; various local fabricators Turbomachinery OEM – power and ~ 15% Holtec; Babcock; Thermal power producer Engineering; Yuba; Krueger

Financial Performance Financial Performance Financial Performance Financial Performance

Captured Revenue in Expansion Cycle C t d R i E i C l ($ in millions) $101.1 $93 6 $93.6 $86.4 $65.8 $65.0 $60 - $70 $55 2 $55.2 $41.3 FY2005 FY2005 FY2006 FY2006 FY2007 FY2007 FY2008 FY2008 FY2009 FY2009 Q1 FY10 Q1 FY10 FY2010 E t FY2010 Est. TTM

I Improved Productivity d P d ti it Beyond Volume Enhancements Sales per Employee Inventory Turnover (in thousands) (times per year) 374.0 363.0 12.6 12.4 11.0 308.0 10.0 248.0 7.9 222.0 172.0 5.7 FY2005 FY2006 FY2007 FY2008 FY2009 Q1FY10 TTM FY2005 FY2006 FY2007 FY2008 FY2009 Q1FY10 TTM

Strengthened Gross Profit Margin St th d G P fit M i $101.1 $93.6 $86.4 Potential 41.3% $65.8 40.4% FY2010 39.5% $55.2 range: 28% - 31% $41.3 28.9% 25.6% 18.2% FY2005 FY2006 FY2007 FY2008 FY2009 Q1FY10 TTM Gross Margin Revenue

N t I Net Income and EPS d EPS $17 467 $17,467 ($ in thousands) $15,034 $15,301 $5,761 , $3,586 $296 FY2005* FY2006 FY2007 FY2008 FY2009 Q1FY10 TTM Earnings $0 03 $0.03 $0 38 $0.38 $0 58** $0.58** $1 49 $1.49 $1.71 $1 71 $1.50 $1 50 per Share ** Includes R&D tax credit of $0.16. Note: All earnings per share amounts * From continuing operations. adjusted for stock splits

St Strong Balance Sheet B l Sh t Equity Long-term Liabilities $64.4 $61.1 ($ in millions) ($ in millions) $48.5 Cash, Cash Equivalents $30.7 $27.1 and Investments $16 6 $16.6 $46.2 $6.1 $45.3 * $2.6 $2.8 $1.6 $1.8 $2.6 $36.8 FY2005 FY2006 FY2007 FY2008 FY2009Q1FY10 Current Assets Current Liabilities $15.1 $73.9 $72.7 $11.0 $57.4 $57.4 $2.7 $36.7 FY2005 FY2006 FY2007 FY2008 FY2009 Q1 FY10 $27.4 $23.2 $20.8 $22.1 $20.4 $16.6 * $42 7 million in U S banks and $42.7 million in U.S. banks and $10 9 $10.9 $10 6 $10.6 U.S. Treasury securities. FY2005 FY2006 FY2007 FY2008 FY2009 Q1FY10

P i Priority: Cash Management it C h M t Sales increased 145% and cash conversion cycle was lowered from 112 to 17 days at 3/31/09 120 120 112 ycle (Days) $ millions) 101.1 100 100 93.6 86 4 86.4 Sales ($ h Conversion Cy 80 80 65.8 60 55.2 60 Cas 41.3 40 40 Expected 41 to be in the th 20 20 20- to 30- 17 day range in 2010 0 0 FY2005 FY2006 FY2007 FY2008 FY2009 Q1 FY10 TTM TTM Sales Cash Conversion Cycle Note: cash conversion cycle equals days sales outstanding plus days inventory on hand minus days payables outstanding

St Strategy & Outlook t & O tl k