Graham Corporation (NYSE:GHM) Q1 2021 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 11:00 am ET
[Operator Instructions] Our first question comes from the line of Joe Mondillo with Sidoti & Company. Please proceed with your question.
Hi, Jim. Jeff.
James R. Lines
So first question, Jim. So I believe it was right around this time last year, you came off a first quarter with not sort of below average bookings, obviously, different environment a year ago, but similar in terms of the bookings anyways. And at that time, you were calling for a book-to-bill ratio over 1, so we were anticipating a pretty big ramp-up throughout the year of bookings and you did see a second quarter that was really good, and it just didn't really translate into the back half of the year. And I'm wondering what gives you the confidence to make that call essentially here again today, where some of the projects that you were looking forward to win last year just pushed out and you're getting closer to the finish line or sort of just wondering about that?
James R. Lines
Sure. Last year, we did see the end markets evolve as we got into the third fiscal quarter, we saw some behavioral changes that we weren't anticipating from our customers that were pushing order decisions to the right or they canceled some orders or they our backlog was actually some of our backlog was reconfigured at their convenience to be executed later than was originally planned. At this point, as we talk about fiscal 2021 and the guidance, it's really reflective of we just completed a $16 million Q1, we have $107 million of backlog in hand, absent further cancellations. And of that, the model that we have is 60% of the backlog certainly in hand on June 30 is projected to convert over Q2, Q3 and Q4, basically giving us $81 million of revenue that's predictable and in hand. And we have our typical in and out short-cycle work that we've governed down in our projections that can be somewhere between $4 million a quarter and $6 million a quarter. So we feel strongly confident that we'll land within the $90 million to $95 million guidance. I haven't given a book-to-bill guide book-to-bill commitment at this point.
Yes. So I was just extrapolating from the comments in the press release where you state that back you're expecting backlog to rise throughout the year. And so relative to that revenue guidance for fiscal 2021 for the backlog to grow, you would have to get to a book-to-bill above 1.
James R. Lines
Thank you for pointing me to that. That was helpful. So the thesis that we have there or the modeling that we have there, you had heard in the prepared remarks, is there's $30 million to $50 million worth of naval work that we're expecting to be placed with someone during the next three quarters. And we're focused on it, we're going after it, and we hope to win a good percentage of that work. So that's a key element in our backlog growth. Secondarily, we