Can you discuss the direcon of the energy markets, a key end market for the
Company?
Crudeoilrefiningisakeysegmentoftheenergymarketandhashistoricallyrepresented25%
to40%ofGraham’stotalrevenue.Itisobviouslyanimportantmarketforus.Recently,ithas
beenlesspredictable,exhibinggreatervolality.Thismarkethistoricallymovedwiththe
priceofoilbecauseover2/3ofrevenuesgeneratedinthissegmentarefromnaonalor
integratedoilcompanies.Theirabilitytoinvestfollowsthepriceofoil.So,whenthepriceper
barrelofoilishigh,wetendtoobservestrongdemandforourproducts,andconversely,when
thepriceislow,asithasbeenrecently,thedemandforourequipmentslowsmeasurably.
Duetotheglobalpandemicthatresultedindramacreduconstodemandforrefinedpetroleum
products,thereisnotanobservedchangetocapitalinvestmentrecoveryeventhoughthepriceof
crudeoilhasreturnedtoapproximately$60/BBL.
Inthenearterm,weexpectthestrongestdemandfornewcruderefiningcapacitywillcomefrom
Asia.WehaveestablishedsubsidiarystructuresinbothChina,withGrahamVacuumandHeat
TransferTechnology(Suzhou),andinIndia,withGrahamIndiaPvtLtd,inordertomorefullycapitalize
onexpectedinvestmentinthosetwocountries,andtherestofAsia.Theteamsinthesesubsidiaries
developopportuniesanddirectlysellourproductstocustomersinthoseregions.Wealsohave
qualityassurancepersonnelineachlocaontoensurequalityofsub‐vendorfabricaonwhenitis
necessarytomanufacturelocally.
TheNorthAmericanmarketwillconnuetobeimportant,asrefineriesinvesttoleveragewhatthey
currentlyhave,andourperformanceimprovementengineersintheU.S.GulfCoastarelocated
perfectlyforthis.MuchoftheU.S.refiningcapacityislocatedinthegulfcoastregion
andourteam
ofengineerstheresupportscustomerswithtroubleshoong,educaonandtraining,andperformance
enhancement/reliability.
Therearefour(4)driversofdemandforGrahamproductswithincrudeoilrefiningwhichare:new
capacityinvestmenttomatchregionalorglobaldemandgrowth;revamp/deboleneckingexisng
faciliestoincreasethroughput,improveyieldorallowforgreaterfeedstockdiversity;replacement
partsandequipmentwhenendoflifeisreached;andlastly,legislaveortax
policy,suchas
renewabledieselprojectstoday,whichdriveinvestmentsthatspanacoupleyearsinduraon.The
firstthreedriversaredowncurrently,duetothelossofdemandedtothepandemic,whilethe
fourthdriverismoreacveatthispointinme.
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Jim Lines
PRESIDENT AND CEO
GRAHAM CORPORATION
Can you share your background?
IjoinedGrahamin1984asanengineerinApplicaonEngineering.Inthe37yearssincethen,Ihave
hadrolesinengineering,markeng,sales,R&Dandgeneralmanagement,andIbecametheCEOof
Grahamin2008.
An interview about Graham and its commercial markets with: