Singular Research ConferenceJeffrey Glajch, Vice President & CFOSingular Research Conference

September 10, 2009

Safe Harbor Statement Regarding Forward Looking Statements

This presentation contains forward-looking statements within the meaning of Section 27A of theThis presentation contains forward-looking statements within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, asamended.

Forward-looking statements are subject to risks, uncertainties and assumptions and can be identified bywords such as “expects,” “estimates,” “projects,” “anticipates,” “believes,” “could,” and other similarwords and expressions. All statements addressing operating performance, events, or developments thatGraham expects or anticipates will occur in the future, including but not limited to, statements relating toanticipated revenues, profit margins, foreign operations, Graham’s strategy to build its global salesrepresentative 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 marketconditions in the industries in which Graham operates, changes in general economic conditions andcustomer behavior and Graham’s acquisition strategy are forward-looking statements. Because they areforward-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 andQuarterly Reports filed with the Securities and Exchange Commission, included under the headingentitled “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any ofGraham's underlying assumptions prove incorrect, actual results may vary materially from thosey g p p y y ycurrently 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 anyrevisions 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 t e des go d eade t e des g

and manufacture of and manufacture of ENGINEEREDENGINEERED--TOTO--ORDERORDER

products for the products for the ENERGYENERGY MARKETSMARKETS

Graham CorporationFounded: 1936; IPO: 1968;

NYSE Amex: GHM $12.92

Common shares outstanding 9.8 million$Market capitalization $127 million

52-week price range $42.66 – $6.85Avg. daily trading volume (12 mos.) 237,557Stock splits:

► 5 for 4 1/2/2008

► 2 for 1 10/7/2008Ownership:

►Institutional 52.5%►Insider 2.9%

Note: Market data as of September 2, 2009; ownership as of most recent filing.

P d tProductsCondensers

26%26%

Ejectors40%

Heat Exchangers

9%

Aftermarket19%

Pumps6%

U.S. 51%

International 49%

Note: Percent of Q1 FY2010 revenue.

Refinery Ejector SystemEjector system lowers the pressure in the distillation column to allow crude oil to

CNOOC Huizhou Refinery–China

240,000 BBL/day refinery

boil at a lower temperature. This allows for more efficient and cost-effective separation of crude oil into valuable 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.

CondensersEjectors

Graham Corporation, 2009

Di ifi d M k tDiversified MarketsChemical Processing

27%

R fi iOther

Industrial & 46%22% RefiningIndustrial & Commercial Applications

46%22%

5%

Note: Percent of FY2010 revenue.Power

C lti t Di M k t

OIL REFINING CHEMICAL PROCESSING

Cultivate Diverse Markets

OIL REFINING

Conventional crude oilOil sandsExtra-heavy crude oil

CHEMICAL PROCESSING

EthyleneAmmoniaNitrogen

Ethylene glycolDetergent alcoholsPlastics, resins, fibersExtra heavy crude oil

Sour crudeLube oil

NitrogenMethanol StyrenePolystyrene

Plastics, resins, fibersCoal-to-liquids (CTL)Gas-to-liquids (GTL)

POWER GENERATION

CogenerationWaste to energy

OTHER APPLICATIONSEdible oil/OleochemicalsBiofuels:Waste-to-energy

Heat, power and lightGeothermalNuclearI it

Biofuels:EthanolBiodiesel

HVACIndustrial gasesIn-situ Industrial gasesCryogenic

Di ersified Geographies & Ind striesDiversified Geographies & Industries 2009 Orders

$34 million Refineries South Korea, China, Bahrain, Oman, South America, USA

$20 million Petrochemical China, North Africa, Trinidad & Tobago, Mexico USAMexico, USA

$4 million Power generation Turkey, USA

$16 illi Edibl il HVAC il USA$16 million Edible oil, HVAC, oil production, government, industrial gases, OEM

USA

Global Distillation Capacity Growth

Total Net Growth: 6 mb/d

Global Distillation Capacity Growth(through 2015)

Europe: 0.2 mb/d

Total Net Growth: 6 mb/dRussia and Eastern Europe:

US & Canada:0.9 mb/d

Europe: 0.2 mb/d

Latin

Asia-Pacific: 2.9 mb/d

America & Africa: 0.3 mb/d

Africa:

Middle East: 1.3 mb/d

0.4mb/dmb/d = million barrels per daySource: OPEC World Oil Outlook 2009

CNorth American Competition

Market GHM CompetitorsMarket GHM Market Share

Competitors

Refining vacuum distillation ~ 75% Gardner DenverRefining vacuum distillation 75% Gardner Denver

Chemicals/Petrochemicals ~ 25% Croll Reynolds; Schutte Koerting;Gardner Denver

Turbomachinery OEM – refining ~ 50% Ambassador; Yuba; KreugerTurbomachinery OEM refining, petrochemical

50% Ambassador; Yuba; Kreuger

Turbomachinery OEM – power and power producer

~ 15% Holtec; Babcock; Thermal Engineering; Yuba; Krueger

HVAC ~ 10% Alfa Laval; APV; ITT; Ambassador

CInternational Competition

Market GHM CompetitorsMarket GHM Market Share

Competitors

Refining vacuum distillation ~ 35 to 50% Gardner Denver; GEA Jet Pump; g ; p;Korting Hannover; Edwards

Chemicals/Petrochemicals ~ 25% Croll Reynolds; Schutte Koerting;Gardner Denver; GEA Jet Pump; K ti H Ed dKorting Hannover; Edwards

Turbomachinery OEM – refining, petrochemical

~ 50% Donghwa-Entec; Bumwoo; Oiltechnik; Kreuger; various local fabricators

Turbomachinery OEM – power and power producer

~ 15% Holtec; Babcock; Thermal Engineering; Yuba; Krueger

Financial PerformanceFinancial PerformanceFinancial PerformanceFinancial Performance

C t d R i E i C lCaptured Revenue in Expansion Cycle

$101.1$93 6

($ in millions)

$55 2$65.8

$86.4$93.6

$65.0$60 - $70

$41.3

$55.2

FY2005 FY2006 FY2007 FY2008 FY2009 Q1 FY10 FY2010 E tFY2005 FY2006 FY2007 FY2008 FY2009 Q1 FY10 TTM

FY2010 Est.

I d P d ti itImproved ProductivityBeyond Volume Enhancements

Sales per Employee(in thousands)

Inventory Turnover(times per year)

10.011.0

12.6 12.4

308.0

374.0 363.0

5.7

7.9

172.0

222.0248.0

FY2005 FY2006 FY2007 FY2008 FY2009 Q1FY10 TTMFY2005 FY2006 FY2007 FY2008 FY2009 Q1FY10 TTM

St th d G P fit M iStrengthened Gross Profit Margin

$86.4$101.1

$93.6

$41.3

$55.2$65.8 39.5%

41.3% 40.4% Potential FY2010 range:

28% - 31%

18.2%

28.9%25.6%

FY2005 FY2006 FY2007 FY2008 FY2009 Q1FY10 TTM

Gross MarginRevenue

N t I d EPS

$17 467

Net Income and EPS

$15,034$17,467

$15,301($ in thousands)

$5,761

$296

$3,586,

FY2005* FY2006 FY2007 FY2008 FY2009 Q1FY10 TTM

Earnings $1 71$1 49$0 58**$0 38$0 03 $1 50

Note: All earnings per share amounts adjusted for stock splits

* From continuing operations. ** Includes R&D tax credit of $0.16.

per Share $1.71$1.49$0.58**$0.38$0.03 $1.50

St B l Sh t$61.1 $64.4

Equity Long-term Liabilities

($ in millions)

Strong Balance Sheet

$16 6$27.1 $30.7

$48.5

Cash, Cash Equivalents and Investments

($ in millions)

$16.6$6.1 $2.8 $1.6 $1.8 $2.6 $2.6

FY2005 FY2006 FY2007 FY2008 FY2009Q1FY10$36.8

$46.2 $45.3*

$11.0$15.1

$57.4

$72.7 $73.9

Current Assets Current Liabilities

$2.7

FY2005 FY2006 FY2007 FY2008 FY2009 Q1 FY10$22.1

$27.4$36.7

$57.4

$10 9 $10 6$16.6 $20.4 $23.2 $20.8

* $42 7 million in U S banks and $10.9 $10.6

FY2005 FY2006 FY2007 FY2008 FY2009 Q1FY10

$42.7 million in U.S. banks and U.S. Treasury securities.

P i it C h M tSales increased 145% and cash conversion cycle

was lowered from 112 to 17 days at 3/31/09

Priority: Cash Management

86 4

101.193.6 100

120

100

120

ycle

(Day

s)

$ m

illio

ns) 112

55.2

65.8

86.4

60

80

60

80

h C

onve

rsio

n C

y

Sale

s ($

41.34040

Cas

41 Expected to be in

th

0

20

0

20

FY2005 FY2006 FY2007 FY2008 FY2009 Q1 FY10 TTM

17

the 20- to 30-day range

in 2010

Note: cash conversion cycle equals days sales outstanding plus days inventory on hand minus days payables outstanding

TTMSales Cash Conversion Cycle

St t & O tl kStrategy & Outlook

D ti C l ShiftDramatic Cycle Shift

$75 7$86.5

$107.1($ in millions)

$54.2

$75.7

$48.3$49.9

$66.2$73.9

$54.9

$22.4$33.1

$37.0

FY2005 FY2006 FY2007 FY2008 FY2009 Q1FY2010 TTMTTM

Backlog Orders

R d i I t f C li litReducing Impact of Cyclicality

$101.1FY09

$65.7

FY98

Mid-Point FY 2010 Guidance

$51.8

$34.931.3%

41.3%

29.5%

26.0%

FY00

Sales

Gross Margin

O ti M i

23.9%

29.5%

9.5%

1.0%

9.0%

Operating Margin

* Assumes mid-point of FY 2010 guidance: a 35% reduction in revenue, a 29.5% gross margin and $13.5 million in SG&A expenses

P t h i l P t ti lPetrochemical PotentialU S: Limited petrochem investmentGlobal recession slows demand growth

U.S: Limited petrochem investment

Middle East: Becoming active

Cap and Trade heavily penalizes U.S. refiners

Middle East: Becoming active

Asia/Middle East: Integrating refining/petrochem;

Over capacity in U.S. refining

Asia/Middle East: Integrating refining/petrochem; Considering new ethylene capacity

Strong growth in emerging economiesInternational: Ammonia/fertilizer plantsSome project revamps, others grassroots

N T St tNear-Term Strategy• People

DevelopmentPeople

• Processes• Capital Plan

Customers• Stay close: consultative selling• Gain market advantage• Selling support for pipeline

Performance• Maintain profitability and positive cash flow• Evaluate potential acquisitions in disruptive market• Capture greater market share

Upturn• Be ready• Ascend growth curve more quickly than in last cycle• Take market share• Continue investing to improve and expand business

Pi li f M j P jPipeline of Major ProjectsPower &

Refining PetrochemicalPower &

other

Very active currentlyVery active currently

Timing of orders notTiming of orders not clear

A i iti C it iAcquisition CriteriaEngineered-Engineered

to-order products

Geographic Expansion

and/or

Strong management

team /Up to

$60 million and/orDiversify Products

team / quality culture

$60 million in revenue

Return exceeds cost ofcost of capital

Singular Research ConferenceJeffrey Glajch, Vice President & CFOSingular Research Conference

September 10, 2009

C t ti i E I d tContraction in Energy Industry

Decline in projected U S consumption

Global recession slows demand growth

Decline in projected U.S. consumption

Cap and Trade heavily penalizes U.S. refiners

Over capacity in U.S. refining

Expanding economies in emerging/developing countries

A i Middl E t S th A iAsia Middle East South America

Ch d Gl b l Oil D d P j tiChanged Global Oil Demand Projections

World Oil Outlook 2008: 50% demand increase by 2030World Oil Outlook 2008: 50% demand increase by 2030

World Oil Outlook 2009: 23% demand increase by 2030

► Consumption dropping in developed areas

► Energy policy changing

► Crude oil pricing lowered sharply

► Capacity utilization is down► Capacity utilization is down

P M k tPower Market

• Waste to energy renewables

• GeothermalUnited States • NuclearStates

• Growing power requirements

• NuclearChina and

India • Hydro, geothermal, fossil fuels

India

N C ti l Oil S l G thNon-Conventional Oil Supply Growth

Oil SandsBiggest contributor =

5 mb/d by 2030

C l

by 2030

Increases Gas-to-liquid

Coal-to-liquid

output by 6 mb/d to 7.5 mb/d

by 2030

Extra-heavyExtra heavy crude

Source: OPEC World Oil Outlook 2008

C di Oil S d S diCanadian Oil Sands Spending

$100 to $150 million

potential demand fordemand for

Graham products

fromfrom 2010 to 2016

P d t Di t C t t C dProducts: Direct Contact Condenser

An 11 MW turbine-generator set at a geothermal power producing plant in Papua New Guinea

P d t S f C dProducts: Surface Condenser

Supports a steam turbine and enables the conversion of maximum energy in high pressure steam into power