GRAHAM CORP

Previous wording

The purchase price for P3 was $11,238 and was comprised of 125 shares of our common stock, representing a value of $1,930, and cash consideration of $7,268. The cash consideration was funded through borrowings on our line of credit. The purchase agreement included a contingent earn-out dependent upon certain financial measures of P3 post-acquisition, in which the sellers are eligible to receive up to $3,000 in additional cash consideration. See Note 2 to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the second quarter ended September 30, 2024 (the "Form 10-Q") for additional information.

Current wording

The purchase price for P3 was $11,238 and was comprised of 125 shares of our common stock, representing a value of $1,930, and cash consideration of $7,268. The cash consideration was funded through borrowings on our line of credit. The purchase agreement included a contingent earn-out dependent upon certain financial measures of P3 post-acquisition, in which the sellers are eligible to receive up to $3,000 in additional cash consideration. See Note 2 to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the third quarter ended December 31, 2024 (the "Form 10-Q") for additional information.

Previous wording

Gross profit and margin for the second quarter of fiscal 2025 was 12,799 and 23.9%, respectively. The 790 basis point improvement in gross profit margin over the comparable period of fiscal 2024 reflected increased leverage on fixed overhead costs due to the higher volume of sales discussed above, as well as an improved mix of sales related to higher margin projects, better execution, and improved pricing. Additionally, second quarter fiscal 2025 gross profit benefited $435 due to a $2,100 grant received from the BlueForge Alliance to reimburse us for the cost of our defense welder training programs in Batavia and related equipment. To date we have received $1,098 of funding under this grant. The BlueForge Alliance is a nonprofit, neutral integrator that supports the United States ("U.S.") Navy's Submarine Industrial Base Initiatives.

Current wording

Gross profit and margin for the third quarter of fiscal 2025 were $11,686 and 24.8%, respectively. The 260 basis point improvement in gross profit margin over the comparable period of fiscal 2024 reflected increased leverage on fixed overhead costs due to the higher volume of sales discussed above, as well as better execution, and improved pricing, partially offset by higher incentive compensation in comparison with the prior year. Additionally, third quarter fiscal 2025 gross profit benefited $255 due to a $2,100 grant received from the BlueForge Alliance to reimburse us for the cost of our defense welder training programs in Batavia and related equipment. To date we have received $1,460 of funding under this grant.

Previous wording

Selling, general and administrative expenses ("SG&A"), including intangible amortization, for the second quarter of fiscal 2025 increased $2,772 over the same period of fiscal 2024 and reflects the investments we are making in our operations, our employees, and our technology. In connection with the acquisition of BN, we entered into a Performance Bonus Agreement to provide employees of BN with a supplemental performance-based award based on the achievement of BN performance objectives for the fiscal years ending March 31, 2024, 2025, and 2026, which can range between $2,000 to $4,000 per year (the "BN Performance Bonus). During the second quarter of fiscal 2025, we recorded $1,076 related to the BN Performance Bonus, a $274 increase over the prior year. The remainder of the increase in SG&A is primarily due to costs related to the implementation of a new enterprise resource planning ("ERP") system at our Batavia facility and additional costs related to P3, as well as increased professional services fees, research and development investment, and personnel costs in connection with our growth and strategic initiatives.

Current wording

Selling, general and administrative expenses ("SG&A"), including intangible amortization, for the third quarter of fiscal 2025 increased $884 over the same period of fiscal 2024 and reflects the investments we are making in our people, our processes, and our technology. More specifically, SG&A increased $419 over the prior year quarter due to bad debt reserves related to foreign and smaller space customers, which was offset by lower professional fees of $420. The increase in SG&A is also due to costs related to the implementation of a new enterprise resource planning ("ERP") system at our Batavia facility, incremental costs related to P3, increased research and development investment, and increased personnel costs in connection with our growth and strategic initiatives. In connection with the acquisition of BN, we entered into a Performance Bonus Agreement to provide employees of BN with a supplemental performance-based award based on the achievement of BN performance objectives for the fiscal years ending March 31, 2024, 2025, and 2026, which can range between $2,000 to $4,000 per year (the "BN Performance Bonus). During the third quarter of fiscal 2025, we recorded $1,076 related to the BN Performance Bonus, a $188 decrease from the prior year.

Previous wording

Backlog was $407,009 at September 30, 2024, compared with $390,868 and $313,343 at March 31, 2024 and September 30, 2023, respectively. This increase was primarily driven by growth in our chemical/petrochemical and space markets. For more information on this key performance indicator see "Orders and Backlog" below.

Current wording

Backlog was $384,701 at December 31, 2024, compared with $390,868 at March 31, 2024. This decrease was primarily driven by the timing of orders in our defense market. For more information on this key performance indicator see "Orders and Backlog" below.

Previous wording

Cash and cash equivalents at September 30, 2024 were $32,318, compared with $16,939 at March 31, 2024. This increase was primarily due to cash provided by operating activities of $22,649, partially offset by capital expenditures of $6,464 as we continue to invest in process improvement and longer-term growth opportunities. Cash flow from operations during the quarter was primarily driven by cash net income and a reduction in working capital as a result of strong cash management and favorable contract terms.

Current wording

Cash and cash equivalents at December 31, 2024 were $30,046, compared with $16,939 at March 31, 2024. This increase was primarily due to cash provided by operating activities of $27,873, partially offset by capital expenditures of $13,800 as we continue to invest in process improvement and longer-term growth opportunities. Cash flow from operations during the quarter was primarily driven by cash net income and a reduction in working capital as a result of strong cash management and favorable contract terms.

Previous wording

Demand for our equipment and systems for the defense industry is expected to remain strong and continue to expand, based on defense budget plans, accelerated ship build schedules, increased geopolitical tensions, the projected build schedule of submarines, aircraft carriers and undersea propulsion and power systems and the solutions we provide. In addition to U.S. Navy applications, we also provide specialty pumps, turbines, compressors, and controllers for various fluid and thermal management systems used in U.S. Department of Defense radar, laser, electronics, and power systems. We have built a leading position, and in most instances a sole source position, for certain systems and equipment for the defense industry.

Current wording

Demand for our equipment and systems for the defense industry is expected to remain strong and continue to expand, based on defense budget plans, accelerated ship build schedules, increased geopolitical tensions, the projected build schedules of submarines, aircraft carriers, and undersea propulsion and power systems, and the solutions we provide. We also don't believe that changes made by the new U.S. presidential administration will materially impact our defense business. In addition to U.S. Navy applications, we also provide specialty pumps, turbines, compressors, and controllers for various fluid and thermal management systems used in U.S. Department of Defense radar, laser, electronics, and power systems. We have built a leading position, and in most instances a sole source position, for certain systems and equipment for the defense industry.

Previous wording

Our traditional energy markets are undergoing significant transition. While we expect that fossil fuels will continue to be an important component in the global energy industry for many years to come, there are significant changes in the priorities for capital investments by our customers and the regions in which those investments are being made. We expect that the systemic changes in the energy markets, which are influenced by the increasing use by consumers of alternative fuels and government policies to stimulate their usage, will lead to demand growth for fossil-based fuels that is less than the global growth rate. The timing and catalyst for a recovery in this market remain uncertain. Accordingly, we believe that in the near term the quantity of projects available for us to compete for will remain low and that new project pricing will remain challenging. Additionally, we believe that the majority of new capital investment orders in our traditional energy markets will be outside the U.S. such as India and the Middle-East. Finally, over the last few years we have experienced an increase in our energy and chemical aftermarket orders primarily from the domestic market as our customers continue to maintain and invest in the facilities they currently operate. We expect this trend to continue for the foreseeable future.

Current wording

Our traditional energy markets are undergoing significant transition. While we expect that fossil fuels will continue to be an important component in the global energy industry for many years to come, there are significant changes in the priorities for capital investments by our customers and the regions in which those investments are being made. We expect that the systemic changes in the energy markets, which are influenced by the increasing use by consumers of alternative fuels and government policies to stimulate their usage, may lead to demand growth for fossil-based fuels that is less than the global growth rate. The timing and catalyst for a recovery in this market remain uncertain. Accordingly, we believe that in the near term the quantity of projects available for us to compete for will remain low and that new project pricing will remain challenging. Additionally, we believe that the majority of new capital investment orders in our traditional energy markets will be outside the U.S., such as India and the Middle-East. Finally, over the last few years we have experienced an increase in our energy and chemical aftermarket orders primarily from the domestic market as our customers continue to maintain and invest in the facilities they currently operate. We expect this trend to continue for the foreseeable future.

Previous wording

Over the long-term, we expect that population growth, an expanding global middle class, and an increasing desire for improved quality of life and access to consumer products will drive increased demand for industrial goods within the plastics and resins value chain along with fertilizers and related products. As such, we expect investment in new global chemical and petrochemical capacity will improve and drive growth in demand for our products and services.

Current wording

Over the long-term, we expect that population growth, an expanding global middle class, and an increasing desire for improved quality of life and access to consumer products will drive increased demand for industrial goods within the plastics and resins value chain along with fertilizers and related products. As such, we expect investment in new global chemical and petrochemical capacity will continue and drive growth in demand for our products and services.

Previous wording

As illustrated below, we have succeeded over the last several years with our strategy to increase our participation in the defense market, which comprised 83% of our total backlog at September 30, 2024.

Current wording

As illustrated below, we have succeeded over the last several years with our strategy to increase our participation in the defense market, which comprised 80% of our total backlog at December 31, 2024.

Previous wording

Domestic sales as a percentage of aggregate sales were 85% in the second quarter of fiscal 2025, comparable to the 86% in the second quarter of fiscal 2024, reflecting our continued presence in the defense industry, which is U.S. based. Sales for the three months ended September 30, 2024 were 58% to the defense industry compared to 56% for the comparable quarter in fiscal 2024.

Current wording

Domestic sales as a percentage of aggregate sales were 84% in the third quarter of fiscal 2025, comparable to the 84% in the third quarter of fiscal 2024, reflecting our continued presence in the defense industry, which is U.S. based. Sales for the three months ended December 31, 2024 were 57% to the defense industry compared to 56% for the comparable quarter in fiscal 2024.

Previous wording

Net sales for the first six months of fiscal 2025 increased $10,869, or 12%, from the first six months of fiscal 2024. Approximately $2,437 of this increase was due to the acquisition of P3. Additionally, the increase over the prior year was due to a $12,056, or 28%, increase in sales to the defense industry, primarily due to better execution, improved pricing, new programs, growth in existing programs, and increased direct labor. Net sales for the first six months of fiscal 2025 to the refining market increased 18%, driven by increased sales in India and the timing of larger capital projects, partially offset by lower aftermarket sales and sales in China. Aftermarket sales to the refining, chemical/petrochemical, and defense markets of $17,610 remained strong but were $4,553 lower than the prior year record levels. These increases were partially offset by a $3,254 decrease in "Other" sales due to project timing across multiple markets and customers.

Current wording

Net sales for the first nine months of fiscal 2025 increased $14,088, or 10%, from the first nine months of fiscal 2024. Approximately $2,373 of this increase was due to the acquisition of P3 which primarily serves the defense and space markets. Additionally, the increase over the prior year was due to a 20% increase in sales to the defense industry, due to new programs, growth in existing programs, better execution, improved pricing, and timing. Net sales for the first nine months of fiscal 2025 to the refining and chemical/petrochemical markets increased 6% and 17%, respectively, driven by the timing of larger capital projects, partially offset by lower aftermarket sales. Aftermarket sales to the refining, chemical, petrochemical, and defense markets of $27,314 remained strong but were 12% lower than the prior year record levels. These increases were partially offset by a $5,059 decrease in "Other" sales due to project timing across multiple markets and customers including sales to our new energy markets. The new energy market remains a key strategic focus for our business with significant opportunities for growth over the long-term but are lumpy in nature.

Previous wording

Domestic sales as a percentage of aggregate sales were 83% for the first six months of fiscal 2025, comparable to the same period of fiscal 2024, reflecting our continued presence in the defense industry, which is U.S. based. Sales for the six months ended September 30, 2024 were 58% to the defense industry compared to 52% for the comparable quarter in fiscal 2024. Fluctuation in sales among markets, products and geographic locations varies, sometimes significantly, from quarter-to-quarter based on timing and magnitude of projects. See also "Current Market Conditions," above. For additional information on anticipated future sales and our markets, see "Orders and Backlog" below.

Current wording

Domestic sales as a percentage of aggregate sales were 84% for the first nine months of fiscal 2025, comparable to the 83% for the same period of fiscal 2024, reflecting our continued presence in the defense industry, which is U.S. based. Sales for the nine months ended December 31, 2024 were 58% to the defense industry compared to 53% for the comparable quarter in fiscal 2024. Fluctuation in sales among markets, products and geographic locations varies, sometimes significantly, from quarter-to-quarter based on timing and magnitude of projects. See also "Current Market Conditions," above. For additional information on anticipated future sales and our markets, see "Orders and Backlog" below.

Previous wording

Gross profit and margin for the second quarter of fiscal 2025 was $12,799 and 23.9%, respectively. Gross profit and margin for the first six months of fiscal 2025 was $25,167 and 24.3%, respectively. These 790 and 470 basis point improvements in gross profit margin over the comparable quarter and year-to-date periods of fiscal 2024, respectively, reflected increased leverage on fixed overhead costs due to the higher volume of sales discussed above, as well as an improved mix of sales related to higher margin projects, better execution, and improved pricing, partially offset by higher incentive compensation in comparison with the prior year. Additionally, second quarter and the first six months of fiscal 2025 gross profit benefited $435 and $915, respectively, from a $2,100 grant received from the BlueForge Alliance to reimburse us for the cost of our defense welder training programs in Batavia and related equipment. To date we have received $1,098 of funding under this grant.

Current wording

Gross profit and margin for the third quarter of fiscal 2025 was $11,686 and 24.8%, respectively, and $36,853 and 24.5%, respectively, for the first nine months of fiscal 2025. These 260 and 410 basis point improvements in gross profit margin over the comparable quarter and year-to-date periods of fiscal 2024, respectively, reflected increased leverage on fixed overhead costs due to the higher volume of sales discussed above, as well as better execution and improved pricing, partially offset by higher incentive compensation in comparison with the prior year. Additionally, third quarter and the first nine months of fiscal 2025 gross profit benefited $254 and $1,172, respectively, from a $2,100 grant received from the BlueForge Alliance to reimburse us for the cost of our defense welder training programs in Batavia and related equipment. To date we have received $1,460 of funding under this grant.

Previous wording

Changes in SG&A expense, including amortization expense, for the three and six months ending September 30, 2024 versus the comparable prior year period is as follows:

Current wording

Changes in SG&A expense, including amortization expense, for the three and nine months ending December 31, 2024 versus the comparable prior year period is as follows:

Previous wording

In connection with the acquisition of BN, we entered into a Performance Bonus Agreement to provide employees of BN with a supplemental performance-based award based on the achievement of BN performance objectives for fiscal years ending March 31, 2024, 2025 and 2026, which can range between $2,000 and $4,000 per year. The increase in research and development costs reflects the increased level of investment we are making in our products and technology. The increase in ERP implementation costs related to the new ERP system at our Batavia facility. In addition to the above, P3 added $371 and $720 to SG&A expense for the quarter and first six months of fiscal 2025 versus the prior year, respectively, which includes amortization of customer relationship and tradename intangibles. Other increases to SG&A include increases due to normal merit increases as well as increased staffing to support our growth.

Current wording

In connection with the acquisition of BN, we entered into a Performance Bonus Agreement to provide employees of BN with a supplemental performance-based award based on the achievement of BN performance objectives for fiscal years ending March 31, 2024, 2025 and 2026, which can range between $2,000 and $4,000 per year. The increase in research and development costs reflects the increased level of investment we are making in our products and technology. The increase in ERP implementation costs related to the new ERP system at our Batavia facility. Other increases to SG&A include personnel cost increases due to normal merit increases and increased staffing to support growth, as well as an increase in bad debt reserves related to foreign and smaller space customers.

Previous wording

Other operating income represents the change in fair value of the P3 contingent earn-out liability and was $596 and $726 for the three and six month periods ended September 30, 2024, respectively, versus $0 for the comparable prior year periods of fiscal 2024.

Current wording

Other operating income represents the change in fair value of the P3 contingent earn-out liability and was $220 and $946 for the three and nine month periods ended December 31, 2024, respectively, versus $0 for the comparable prior year periods of fiscal 2024. The change in fair value was due to delayed orders/projects that extended beyond the earnout period.

Previous wording

Net interest income for the second quarter and first six months of fiscal 2025 was $153 and $314, respectively, compared to net interest expense of $55 and $240 for the comparable periods of fiscal 2024, respectively. This increase in interest income was due to our strong cash position and lower debt levels versus fiscal 2024.

Current wording

Net interest income for the third quarter and first nine months of fiscal 2025 was $128 and $442, respectively, compared to net interest expense of $37 and $277 for the comparable periods of fiscal 2024, respectively. This increase in interest income was due to our strong cash position and lower debt levels versus fiscal 2024.

Previous wording

Our effective tax rate for the second quarter of fiscal 2025 was 24%, compared with 37% in the second quarter of fiscal 2024. Our effective tax rate for the first six months of fiscal 2025 was 18%, compared with 25% for the first six months of fiscal 2024. Our effective tax rate can vary significantly from quarter to quarter depending on the level of projected pre-tax income, the amount of projected income derived from our higher tax rate foreign subsidiaries, as well as the timing of discrete tax items, primarily related to the vesting of restricted stock awards. The decrease in our effective tax rate was primarily due to a discrete benefit recognized in the first quarter of fiscal 2025 related to the vesting of restricted stock awards and the Company's improved stock price over the last year. Additionally, the first six months of fiscal 2025 effective tax rate benefited from a higher mix of income in lower tax rate jurisdictions in fiscal 2025 compared to fiscal 2024. For fiscal 2025, we expect our effective tax rate to be between 20% and 22%, as the impact of these discrete tax items on our full year effective tax rate lessens over the course of the year.

Current wording

Our effective tax rate for the third quarter of fiscal 2025 was 29%, compared with (200)% in the third quarter of fiscal 2024. Our effective tax rate for the first nine months of fiscal 2025 was 20%, compared with 22% for the first nine months of fiscal 2024. Our effective tax rate can vary significantly from quarter to quarter depending on the level of projected pre-tax income, the amount of projected income derived from our higher tax rate foreign subsidiaries, as well as the timing of discrete tax items, primarily related to the vesting of restricted stock awards. The decrease in our effective tax rate for the first nine months of fiscal 2025 versus the prior year was primarily due to a discrete tax benefit recognized in the first quarter of fiscal 2025 related to the vesting of restricted stock awards and the Company's improved stock price over the prior year, partially offset by return to provision adjustments recognized in the third quarter of fiscal 2025 due to changes in estimates. For fiscal 2025, we expect our effective tax rate to be between 20% and 22%, as the impact of these discrete tax items on our full year effective tax rate lessens over the course of the year.

Previous wording

The result of the above is that net income and income per diluted share for the second quarter of fiscal 2025 were $3,281 and $0.30, respectively, compared with $411 and $0.04, respectively, for the second quarter of fiscal 2024. Adjusted net income and adjusted net income per diluted share for the second quarter of fiscal 2025 were $3,414 and $0.31, respectively, compared with net income of $754 and $0.07, respectively, for the second quarter of fiscal 2024. See "Non-GAAP Measures" below for a reconciliation of adjusted net income and adjusted net income per diluted share to the comparable GAAP amount.

Current wording

The result of the above is that net income and income per diluted share for the third quarter of fiscal 2025 were $1,588 and $0.14, respectively, compared with $165 and $0.02, respectively, for the third quarter of fiscal 2024. Adjusted net income and adjusted net income per diluted share for the third quarter of fiscal 2025 were $1,966 and $0.18, respectively, compared with adjusted net income and adjusted net income per diluted share of $1,451 and $0.13, respectively, for the third quarter of fiscal 2024. See "Non-GAAP Measures" below for a reconciliation of adjusted net income and adjusted net income per diluted share to the comparable GAAP amount.

Previous wording

Acquisition and integration (income) costs are incremental costs that are directly related to and as a result of the P3 acquisition. These costs (income) may include, among other things, professional, consulting and other fees, system integration costs, and contingent consideration fair value adjustments. ERP implementation costs primarily relate to consulting costs (training, data conversion, and project management) incurred in connection with the ERP system being implemented throughout our Batavia, New York facility in order to enhance efficiency and productivity and are not expected to recur once the project is completed.

Current wording

Acquisition and integration (income) expense are incremental costs that are directly related to and as a result of the P3 acquisition. These costs (income) may include, among other things, professional, consulting and other fees, system integration costs, and contingent consideration fair value adjustments. ERP implementation costs primarily relate to consulting costs (training, data conversion, and project management) incurred in connection with the ERP system being implemented throughout our Batavia, New York facility in order to enhance efficiency and productivity and are not expected to recur once the project is completed. Debt amendment costs consist of accelerated write-offs of unamortized deferred debt issuance costs and discounts, prepayment penalties, and attorney fees in connection with the amendment of our credit facility in October 2023.

Previous wording

Net cash provided by operating activities for the first six months of fiscal 2025 was $22,649 compared with $11,898 for the first six months of fiscal 2024. This increase was primarily a result of higher cash net income and a reduction in working capital. Over the last year, cash flow from operations benefited approximately $21,000 from customer deposits, net of unbilled revenue, primarily from long-term U.S. Navy defense contracts/projects, that will require cash expenditures over the next 12 to 24 months, which could reduce cash flows from operations.

Current wording

Net cash provided by operating activities for the first nine months of fiscal 2025 was $27,873 compared with $19,483 for the first nine months of fiscal 2024. This increase was primarily a result of higher cash net income and a reduction in working capital. Over the last nine months, cash flow from operations benefited approximately $11,000 from an increase in customer deposits, net of unbilled revenue, primarily from long-term U.S. Navy defense contracts/projects, that will require cash expenditures over the next 12 to 24 months, which could reduce cash flow from operations.

Previous wording

Capital expenditures for the first six months of fiscal 2025 was $6,464 compared to $3,312 for the comparable period in fiscal 2024. Capital expenditures for fiscal 2025 were primarily for machinery and equipment, as well as for buildings and leasehold improvements to support our growth and productivity improvement initiatives and included expenditures related to the expansion of defense production capabilities at our Batavia facility, which is primarily being funded by a $13,500 strategic grant from one of our defense customers. We have increased our expected fiscal 2025 capital expenditures to be in the range of $13,000 to $18,000 from our previous expectations of $10,000 to $15,000 due to a land purchase in Arvada, Colorado and plans to build a cryogenic propellant (LH2, LOX, LCH4) testing facility in Florida to support future growth and customer needs. Approximately half of our planned capital expenditures for fiscal 2025 are discretionary, with the other half being related to the Batavia facility defense expansion. We estimate that our maintenance capital spend is approximately $2,000 per year. However, for the next several years we expect capital expenditures to be approximately 7% to 10% of sales as we continue to invest in our business in order to support our long-term organic growth goals.

Current wording

Capital expenditures for the first nine months of fiscal 2025 were $13,800 compared to $5,193 for the comparable period in fiscal 2024. Capital expenditures for fiscal 2025 were primarily for machinery and equipment, land, buildings and leasehold improvements to support our growth and productivity improvement initiatives and included expenditures related to the expansion of defense production capabilities at our Batavia facility, which is primarily being funded by a $13,500 strategic grant from one of our defense customers. We have increased our expected fiscal 2025 capital expenditures to be in the range of $15,000 to $19,000 from our previous expectations of $10,000 to $15,000 at the beginning of the year due to an opportunistic land purchase in Arvada, Colorado and our plans to construct a cryogenic propellant (LH2, LOX, LCH4) testing facility in Florida to support future growth and customer needs, and were not contemplated at the beginning of the year. Approximately half of our planned capital expenditures for fiscal 2025 are discretionary, with the other half being related to the Batavia facility defense expansion. We estimate that our maintenance capital spend is approximately $2,000 per year. However, for the next several years we expect capital expenditures to be approximately 7% to 10% of sales as we continue to invest in our business in order to support our long-term organic growth goals.

Previous wording

Cash and cash equivalents were $32,318 at September 30, 2024 compared with $16,939 at March 31, 2024, up $15,379 primarily due to cash provided by operations, offset by capital expenditures. At September 30, 2024, $4,890 of our cash and cash equivalents was used to secure our letters of credit and $3,816 of our cash was held by foreign subsidiaries.

Current wording

Cash and cash equivalents were $30,046 at December 31, 2024 compared with $16,939 at March 31, 2024, up $13,107 primarily due to cash provided by operations, offset by capital expenditures. At December 31, 2024, $4,603 of our cash and cash equivalents was used to secure our letters of credit and $4,377 of our cash was held by foreign subsidiaries.

Previous wording

On October 13, 2023, we terminated our revolving credit facility and repaid our term loan with Bank of America, and entered into a new five-year revolving credit facility with Wells Fargo that provides a $35,000 line of credit that automatically increases to $50,000 upon the Company satisfying specified covenants, which were satisfied during the second quarter of fiscal 2025 (the "New Revolving Credit Facility"). As of September 30, 2024, there were no borrowings and $6,847 letters of credit outstanding on the New Revolving Credit Facility and the amount available to borrow was $43,152, subject to interest and leverage covenants.

Current wording

On October 13, 2023, we terminated our revolving credit facility and repaid our term loan with Bank of America, and entered into a new five-year revolving credit facility with Wells Fargo that provides a $50,000 line of credit (the "New Revolving Credit Facility"). As of December 31, 2024, there were no borrowings and $7,202 letters of credit outstanding on the New Revolving Credit Facility and the amount available to borrow was $42,798, subject to interest and leverage covenants.

Previous wording

The New Revolving Credit Facility contains terms that may, under certain circumstances as defined in the agreement, restrict our ability to declare or pay dividends. Any determination by our Board of Directors regarding dividends in the future will depend on a variety of factors, including our future financial performance, organic and inorganic growth opportunities, general economic conditions, and financial, competitive, regulatory, and other factors, many of which are beyond our control. We did not pay any dividends during the six months ended September 30, 2024, or during fiscal 2024 and currently have no intention to pay dividends for the foreseeable future.

Current wording

The New Revolving Credit Facility contains terms that may, under certain circumstances as defined in the agreement, restrict our ability to declare or pay dividends. Any determination by our Board of Directors regarding dividends in the future will depend on a variety of factors, including our future financial performance, organic and inorganic growth opportunities, general economic conditions, and financial, competitive, regulatory, and other factors, many of which are beyond our control. We did not pay any dividends during the first nine months of fiscal 2025 or during fiscal 2024 and currently have no intention to pay dividends for the foreseeable future.

Previous wording

The following tables provides our orders by market and geographic region including the percentage of total orders and change in comparison to the prior year for each category and period presented. Percentages may not sum to the total due to rounding:

Current wording

The following tables provide our orders by market and geographic region including the percentage of total orders and change in comparison to the prior year for each category and period presented. Percentages may not sum to the total due to rounding:

Previous wording

Orders booked in the second quarter of fiscal 2025 were $63,678 or 1.2x net sales for the quarter. Orders booked for the six-month were $119,445 or 1.2x net sales for the period. As a result, backlog increased $10,234 (3%) during the quarter and $16,141 (4%) for the first six month of fiscal 2025 to $407,009 at September 30, 2024. Orders for the second quarter of fiscal 2025 benefited from a contract to provide the cryogenic pumps for a space launch vehicle and contract to provide the MK19 Air Turbine Pump for the U.S. Navy Columbia-class submarine, which is a new program for the Company. In addition to the above, orders for the first six months of fiscal 2025 included follow-on orders for the second option year of alternators and regulators for the U.S. Navy MK48 Torpedo program, as well as an order for three surface condenser systems for the world's first net-zero carbon emissions integrated ethylene cracker and derivatives site located in North America. Additionally, after-market orders for the refining and petrochemical markets for the second quarter and first six months of fiscal 2025 were approximately $12,741 and $20,953, respectively, representing an 11% and 8% increase over the prior-year, respectively. Orders for the first six months of fiscal 2024 included $22,000 related to a strategic investment and follow-on orders from a major defense customer and $9,100 for a vacuum distillation system for a refinery in India.

Current wording

Orders booked in the third quarter of fiscal 2025 decreased to $24,786 compared with $123,267 in the third quarter of fiscal 2024. This decrease was primarily due to a record level of orders in the third quarter of fiscal 2024 as a result of follow-on orders for critical U.S. Navy programs related to the Columbia Class submarine and Ford Class carrier programs. After-market orders for the refining, petrochemical, and defense markets for the third quarter of fiscal 2025 increased 51% to $13,013 compared with the prior-year period. Note that our orders tend to be lumpy given the nature of our business (i.e., large capital projects) and in particular, orders to the defense industry, which span multiple years and are larger in size. Orders for the first nine months of fiscal 2025 benefited from a contract to provide cryogenic pumps for a space launch vehicle and a contract to provide the MK19 Air Turbine Pump for the U.S. Navy Columbia-class submarine, which is a new program for the Company. Additionally, orders for the first nine months of fiscal 2025 included follow-on orders for the second option year of alternators and regulators for the U.S. Navy MK48 Torpedo program, as well as an order for a three surface condenser system for the world's first net-zero carbon emissions integrated ethylene cracker and derivatives site located in North America. After-market orders for the refining and petrochemical markets for the first nine months of fiscal 2025 were $34,773, consistent with the prior-year period. Orders for the first nine months of fiscal 2024 included $9,100 for a vacuum distillation system for a refinery in India, $22,000 related to a strategic investment by one of our larger defense customers, and the follow-on defense orders discussed above. For the first nine months of fiscal 2025 our book-to-bill ratio was 1.0x.

Previous wording

Orders to the U.S. represented 74% of total orders for the first six months of fiscal 2025 compared to 81% for the prior year. These orders were primarily to the defense market which are U.S. based.

Current wording

Orders to the U.S. represented 76% of total orders for the first nine months of fiscal 2025 compared to 88% for the prior year. These orders were primarily to the defense market, which are U.S. based, and tend to be lumpy given their large size and are long-term in nature.

Previous wording

We expect to recognize revenue on approximately 35% to 45% of the backlog within one year, 30% to 40% in one to two years and the remaining beyond two years. The majority of the orders that are expected to convert beyond twenty-four months are for the defense industry, specifically the U.S. Navy that have a long conversion cycle (up to six years).

Current wording

We expect to recognize revenue on approximately 45% to 50% of the backlog within one year, 35% to 40% in one to two years and the remaining beyond two years. The majority of the orders that are expected to convert beyond twenty-four months are for the defense industry, specifically the U.S. Navy that have a long conversion cycle (up to six years).

Previous wording

During the third quarter of fiscal 2024, the Audit Committee of the Board of Directors, with the assistance of external counsel and forensic professionals, concluded an investigation into a whistleblower complaint received regarding GIPL. The investigation identified evidence supporting the complaint and other misconduct by employees. The other misconduct total $150 over a period of four years and was isolated to GIPL. All involved employees have been terminated and we have implemented remedial actions, including strengthening our compliance program and internal controls. As a result of the investigation, during the third quarter of fiscal 2024, the statutory auditor and bookkeeper of GIPL tendered their resignations and new firms were appointed. We have voluntarily reported the findings of our investigation to the appropriate authorities in India and the U.S. Department of Justice and the SEC. Although the resolutions of these matters are inherently uncertain, we do not believe any remaining impact will be material to our overall consolidated results of operations, financial position, or cash flows.

Current wording

During the third quarter of fiscal 2024, the Audit Committee of the Board of Directors, with the assistance of external counsel and forensic professionals, concluded an investigation into a whistleblower complaint received regarding GIPL. The investigation identified evidence supporting the complaint and other misconduct by employees. The other misconduct totaled $150 over a period of four years and was isolated to GIPL. All involved employees have been terminated and we have implemented remedial actions, including strengthening our compliance program and internal controls. As a result of the investigation, during the third quarter of fiscal 2024, the statutory auditor and bookkeeper of GIPL tendered their resignations and new firms were appointed. We have voluntarily reported the findings of our investigation to the appropriate authorities in India, the U.S. Department of Justice, and the SEC and will continue to cooperate with those authorities. Although the resolutions of these matters are inherently uncertain, we do not believe any remaining impact will be material to our overall consolidated results of operations, financial position, or cash flows.