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Canadian oil refinery orders capital spare parts for equipment upgrades
Three surface condensers for a world-scale petrochemical complex in Saudi Arabia
BATAVIA, NY, March 10, 2008 – Graham Corporation (AMEX: GHM) announced today that it has been awarded two contracts with a total value of $9.1 million. The first is a capital spare parts order from a Canadian oil refinery that is upgrading equipment, originally supplied by Graham in 1975, to improve corrosion resistance brought on by processing different types of feedstock. Final shipment for this order is scheduled for the second quarter of fiscal year 2009, ending September 30, 2008.
The second order is for three large surface condensers to be installed in an ethylene production facility that is part of a new world-scale petrochemicals complex under construction in Saudi Arabia. The ethylene produced will serve as the feedstock to various downstream chemical processing facilities within the complex. Final shipment for this order is planned for the fourth quarter of fiscal year 2009, ending March 31, 2009.
James R. Lines, Graham’s President and Chief Executive Officer, commented, “We continue to see a steady need for spare parts, and in any given quarter, spare parts orders compromise approximately 15% of our total sales. This segment of our business generally has shorter turn-around times and provides us with some flexibility in production scheduling throughout the year.”
Mr. Lines also noted, ”New and replacement equipment for oil refineries continues to drive demand for Graham’s custom engineered products as refineries worldwide strive to maintain full production capacities. Moreover, to a somewhat lesser degree, the continued expansion of the petrochemical market provides us with ongoing opportunities, particularly in the Middle East, where Graham has a long track record of supplying specialized equipment. We believe the combined demand from these two markets will enable us to generate fiscal year 2009 revenue growth in the 10% to 15% range, with a strong likelihood of being at the upper end of the range. We also believe that our continuing efforts to improve productivity and increase capacity in both manufacturing and engineering will enable us to achieve gross margins in the 35% range or higher in the upcoming fiscal year.”