Gabelli Pump, Valve & Motor SymposiumJim Lines, President & CEOJeff Glajch, Vice President & CFO

Gabe u p, a e & oto Sy pos u

February 25 2010February 25, 2010

Safe Harbor Statement Regarding Forward Looking Statements

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

Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as “expects,” “estimates,” “projects,” “anticipates,” “believes,” “could,” and other similar words. All statements addressing operating performance events or developments that Graham Corporation expects or anticipates will occur in the futureoperating performance, events, or developments that Graham Corporation expects or anticipates will occur in the future, including but not limited to, statements relating to anticipated revenue, the timing of conversion of backlog to sales, profit margins, foreign sales operations, its strategy to build its global sales representative channel, the effectiveness of automation in expanding its engineering capacity, its ability to improve cost competitiveness, customer preferences, changes in market conditions in the industries in which it operates, changes in general economic conditions and customer behavior and its acquisition strategy are forward looking statements Because they are forward looking they should bebehavior and its acquisition strategy are forward-looking statements. Because they are forward-looking, they should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described inGraham Corporation's most recent Annual and Quarterly Reports filed with the Securities and Exchange Commission, including under the heading entitled “Risk Factors.”

Should one or more of these risks or uncertainties materialize or should any of Graham Corporation's underlyingShould one or more of these risks or uncertainties materialize, or should any of Graham Corporation's underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue relianceshould not be placed on Graham Corporation's forward-looking statements. Except as required by law, Graham Corporation disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this press release.

Graham CorporationFounded: 1936; IPO: 1968;

NYSE Amex: GHM $16.40

Common shares outstanding 9.845 million$Market capitalization $161 million

52-week price range $21.84 – $7.16Avg. daily trading volume (12 mos.) 146,868Stock splits:

► 5 for 4 1/2/2008

► 2 for 1 10/7/2008Ownership:

►Institutional 60.8%►Insider 2.8%

Note: Market data as of February 18, 2010; ownership as of most recent filing.

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

P d tProductsCondensers

27%

EjectorsHeat

Exchangersjec o s35%

Exchangers10%

Pumps6%

Aftermarket22%

U.S. 48%

International 52%

Note: All percentages based on Fiscal 2010 nine-month revenue of $48.4 million

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

CNOOC Huizhou Refinery–China

240,000 BBL/day refinery

to 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.

A condenser supports a steam turbine and enables theturbine and enables the conversion of maximum energy in high pressure steam into power. Condensers

Ejectors

Graham Corporation, 2009

Di ifi d M k tDiversified Markets

Chemical Processing Original Equipment

M f t

Refining43%

Processing32%

Manufacturers(Dresser Rand, GE etc.)

EPC Contractors(Jacobs, Fluor etc.)to

mer

s

43%Power &

Other25%

( , )

End Users(Exxon Mobil, Chevron etc.)C

ust

Note: Percentages based on Fiscal 2010 nine-month revenue of $48.4 million

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 Fiscal 2010 Nine-month Orders

$36 million Refineries Saudi Arabia, South Korea, China, Bahrain, Oman, South America, USA

$15 million Petrochemical China, North Africa, Trinidad & TobagoTrinidad & Tobago, Mexico, USA

$39 million Power generation, edible oil, HVAC il d ti OEM

Turkey, USAHVAC, oil production, OEM, government, industrial gases

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/South

Asia-Pacific: 2.9 mb/d

America & Africa: 0.3 mb/d

Middle East: 1.3 mb/d

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

I t ti l M k t E diInternational Markets Expanding

Asia (China)• Refining, petrochemical,

coal-to-liquid fertilizercoal-to-liquid, fertilizer

Middle East• Refining petrochemical

Sales Mix: becoming

more Refining, petrochemical

South America

internationally weighted

• Refining, petrochemical

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; SPX (Yuba); KreugerTurbomachinery OEM refining, petrochemical

50% Ambassador; SPX (Yuba); Kreuger

Turbomachinery OEM – power and power producer

~ 15% Holtec; Babcock; Thermal Engineering; SPX (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; SPX (Yuba); Krueger

M j P j t C lY 1 Y 2 Y 3 Y 4 Y 5

Major Project CycleYear 1 Year 2 Year 3 Year 4 Year 5

Conception to RFP Contracts awarded Construction

Graham Competitive Advantage:Early Involvement

awarded

Year 1 Year 2

Early Involvement$150 million

pipeline consistent with past few years

Graham establishes competitive advantage during first 24 months… Understanding pipeline, developing design options, identifying

p y

decision makers, understanding timing, creating strong relationships to…Gain advantage, optimize margin and win business

S lli C l f M j P j tSelling Cycle for Major ProjectsLarge

Laser focus on the key projects

gpopulation of

potential opportunities

ProjectStart

12 Mos. 18 Mos. 24 Mos.

• Conceptual design study

• Feasibility study• Rough budget• FEL1

• FEED• FEL2

• EPC bidding • Requisition for purchase

End userProcess licensor

Process licensorEPCs

EPCsOEMs

EPCOEM

• FEL1

OEMsOEMs OEM

Financial PerformanceFinancial PerformanceFinancial PerformanceFinancial Performance

C t d R i E i C l($ in millions)

Captured Revenue in Expansion Cycle

$86.4$101.1

$76 3

$41.3

$55.2$65.8 $61.5$60 - $63

$76.3

$48 4

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 E t *

$48.4

Q3 2009 YTD Q3 2010 YTDFY2005 FY2006 FY2007 FY2008 FY2009 FY2010 Est.*

* Guidance provided as of January 29, 2010 and is not being updated as part of this presentation

Q3 2009 YTD Q3 2010 YTD

being updated as part of this presentation

St th d G P fit M iStrengthened Gross Profit Margin

$86.4$101.1

39 5% 41.3%$76.2

$41.3

$55.2$65.8 $60-$63

28.9%

25 6%

35.0%

39.5% .3%

42.1%

$48.4

FY2005 FY2006 FY2007 FY2008 FY2009 FY 2010 Q3 2009 YTD Q3 2010 YTD

18.2%

25.6%

37.1%

FY2005 FY2006 FY2007 FY2008 FY2009 FY 2010 Est.*Gross MarginRevenue

* Estimated FY 2010 gross margin is 34% to 36% on estimated revenue of $60 to $63 million. Guidance provided as of January 29, 2010 and is not being updated as part of this presentation

N t I d EPS($ in thousands)

Net Income and EPS

$15,034$17,467

( )

$13, 886

$3,586$5,761 $5,750

$296

FY2005* FY2006 FY2007 FY2008 FY2009Q3 2009 YTD Q3 2010 YTD

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

$1.36 $0.58

Note: All earnings per share amounts adjusted for stock splits

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

St B l Sh tStrong Balance Sheet

Cash, Cash Equivalents and Investments

($ in millions) ($ in millions)

Working Capital, Net of Cash, Cash Equivalents & Investments

$8.5

$5 8$36.8

$46.2

$57.7($ in millions) ( )

$5.8 $5.1

$0.2

$3.3

$2.7$11.0

$15.1

-$2.5

FY2005 FY2006 FY2007 FY2008 FY2009 Q3 FY10

FY2005 FY2006 FY2007 FY2008 FY2009 Q3 FY10

3 3%0 2%7 7%10 5%20 5% (3 4)%*Percent of 3.3%0.2%7.7%10.5%20.5% (3.4)%

* Based on Q3 FY10 TTM revenue of $73.3 million

Revenue

St t & O tl kStrategy & Outlook

D ti C l Shift$107.1 $110.5($ in millions)

Dramatic Cycle Shift

$54.2

$75.7

$48 3 $50 5

$89.8

$49.9

$66.2

$86.5$73.9

$54.9$67.0

($ )

$22.4$33.1

$48.3$37.0

$50.5$49.9

FY2005 FY2006 FY2007 FY2008 FY2009 Q1FY2010 TTM

Q2FY2010 TTM

Q3FY2010 TTM

$51.6OrderVariation

Orders Backlog($ in millions)

$27.8$17.5

$8.1

$20.5

$8.8

$29.6

Variation($ )

Orders are historically lumpy and best evaluated on at least a trailing four

Q109 Q209 Q309 Q409 Q110 Q210 Q310$25 million U.S. Navy order

gquarter basis

R d i I t f C li lit$101 1FY09

Reducing Impact of Cyclicality$101.1

Mid-Point FY 2010

$51.8

$61.541.3%

35.0%

FY98

FY 2010 Guidance*

$34.9

31.3%

23.9%

26.0%

15.5%

FY00

Revenue

Gross Margin

Operating Margin

9.5%

1.0%

5 5%

*Assumes mid-point of FY 2010 guidance: $61.5 million in revenue, a 35.0% gross margin and approximately $12.0million in SG&A expenses. Guidance provided as of January 29, 2010 and is not being updated as part of this presentation

C t l t Ch i Fi i l P fCatalysts Changing Financial PerformanceA Company-wide Approach to a Better Graham Today and in the Future

Selling Process:• Re-branding• Adding value

• VacAdemics• VacWorks• Technical support

Operational Excellence:• Capital plan • Graham production system• Focus on lead time reduction• First time, every time• Training

Improved Operating Performance

Throughout Cycle

• Technical support• Redefining profit metrics• Decision rights & disciplined

approach• Gain market share• Not every order is a good order

• Training • Safety culture• Continuous improvement• Creating scale

• IT• OutsourcingThroughout Cycley g g• Variable costs

People Process:• Accountability• Policy deployment

Sustainability:• Leadership commitment• Long-term visionPolicy deployment

• Performance management• Change agents:

• IT, HR, OPS & executive

• Alignment

Long term vision• Balance financial results with

investing in the future• Graham management system• Succession planning

• Engagement

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

A i iti C it iAcquisition CriteriaEngineered-

to-orderto-order products for

Energy Industry

Geographic Expansion

and/or

Strong management Up to

$60 million and/orDiversify

Products/Markets

gteam / quality

culture$60 million in revenue

Return exceeds cost

f it lof capital

A i iti St t Th O tiAcquisition Strategy: Three OptionsGeographic Expansiong p p

• Asia, especially China• Middle East• South America

Product Diversification• Specialty heat exchangers

Market Diversification• PowerSpecialty heat exchangers

• Process vacuum equipment• Packaged systems• Process vessels

E i t l

Power√ Nuclear√ Solar√ Alternative energy

• Environmental

Presentation to the Buffalo CFAGabelli Pump, Valve & Motor SymposiumSupplemental SlidesPresentation to the Buffalo CFAFebruary 24, 2010

Jim Lines, President & CEOJeff Glajch, Vice President & CFO

p, y p

February 25 2010February 25, 2010