N Y S E A M E X : G H M

Executing our Strategy ● Driving Sustainable Growth

Diversifying Improving Expanding N Y S E A M E X : G H M

Investor Presentation

December 2011

Jeffrey F. Glajch

Chief Financial Officer

2

This 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 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 be

evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more

fully described in Graham 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

underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated.

In addition, undue reliance should 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 presentation.

Safe Harbor Statement

Recent Price $23.38

Common shares outstanding 9.9 million

Market capitalization $231.5 million

52-week price range $26.30 – $14.36

Avg. daily trading volume (3 mos.) 56,998

Ownership:

►Institutional 67.9%

►Insider 4.0%

►ESOP 3.2%

►Employee Stock Purchase Plan (ESPP) 40% Participation

►Annual dividend $0.08

Note: Market data as of November 30, 2011; ownership as of most recent filing

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Graham Corporation Founded: 1936; IPO: 1968 NYSE Amex: GHM

Executing our Strategy ● Driving Sustainable Growth

Diversifying Improving Expanding

Our Vision

Our vision is to be the

world leader in the design

and manufacture of

ENGINEERED-TO-ORDER (ETO) products for the

ENERGY MARKETS

4

5

Condensers

17%

Ejectors

32%

Aftermarket

12%

Heat Exchangers

6%

Pumps

14%

Other

19%

Refining

41%

Chemical

Processing

12%

Power

28%

H1 FY2012 Sales

$58.6 million

Nuclear

19%

ETO Products and Energy Markets

Products

Markets

($ in millions)

International Revenue Domestic Revenue

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY 2012

$74.2 $62.2

$101.1

$86.4

$65.8

$55.2 55%

55%

37%

46%

50%

49%

* Midpoint of guidance provided on October 28, 2011 ($104-$110 million)

12-Month Revenue

Diversification Drives Recovery

Markets and Geography

$107.0*

FY 2006 – FY 2009

22.4% CAGR

Driven by oil refining

and petrochemical

markets

FY 2010 – FY 2012E

31.2% CAGR

Oil refining, petrochemicals,

Navy and power markets will

drive growth

Growth Drivers

Oil Refining Industry

• Accelerating demand in emerging markets

• Aging infrastructure in developed markets

• Feedstock changes

• Expanding addressable opportunities

Chemical and Hydrocarbon Processing

• Middle class expansion in emerging markets

• Growing world population

• Expanding addressable opportunities

• Edible oil/oleo-chemicals

• Industrial gases

Power Generation

• Aging nuclear power infrastructure

• New power plants

• International nuclear power expansion

• Alternative energy

• Biomass

• Geothermal

• Solar

Power for Defense Industry

• Naval nuclear propulsion program

• Submarine fleet

• Aircraft carriers

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Differentiators

• Specialized manufacturing

capability

• Stringent, highly-controlled

quality processes

• Low-volume / high-mix

business model

• Complex order execution

• Selling model

• Expanding opportunities for

ETO products in critical

applications

• Value-based purchasing

decisions

• High cost of failure

• Limited competition

• Long-term growth trend

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Chemical / Petrochemical

Processing 12%

Oil Refining 41%

Other 19%

Power 28%

Strength Through Diversification

Asia (China)

• Refining, petrochemical, coal-to-liquid, fertilizer

Middle East

• Refining, petrochemical

South America

• Refining, petrochemical

United States

• Nuclear power, renewable energy and refining

• Defense (Navy)

Selling into

the

opportunities

9

Revenue by Geographic Market: H1 FY 2012

Revenue by Industry: H1 FY 2012

Past: Primarily Oil Refining & Petrochem

Now: Four Distinct Markets

Asia 16%

Middle East 20%

Other 14%

U.S. 50%

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Year 1 Year 2

Graham Competitive Advantage:

Early Involvement

Conception to RFP Contracts

awarded Construction

Graham establishes competitive advantage during first 24 months…

Understanding pipeline, developing design options, identifying

decision makers, understanding timing, creating strong relationships to…

Gain advantage, optimize margin and win business

$150 million

pipeline

consistent with

past few years

Year 1 Year 2 Year 3 Year 4 Year 5

Major Project Cycle

Superior quality processes are barrier to entry

• Custom critical equipment fabricator

• Nuclear-quality raw material supplier

• N, NPT, NS, U, and R Stamps and Certificates of Authorizations

Opportunities

• Increase market penetration with existing nuclear power plants

• Integrate engineering and design expertise with certified manufacturing process

• New power plant designs: 4-6 new plants expected by 2018*

• Significant addressable opportunities per plant

* World Nuclear Association 2009 Report 11

Energy Steel Acquisition (Dec. 2010)

Nuclear Power Focused

Use disciplined product pricing and order selection process

Apply continuous improvement and targeted capex to gain capacity and reduce lead time

Employ flexible cost model to accommodate cyclical demand

Align manager and employee compensation with profit and cash management objectives

Focus on cash management and operating working capital

Dramatic improvement in financial results, both at top

and bottom of cycle

Strong, debt free balance

sheet

A business poised for

organic and inorganic long term growth

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Operating Performance Principles

D I V E R S I F Y I N G

I M P R O V I N G

E X P A N D I N G

Executing our Strategy ● Driving Sustainable Growth

Financial Performance

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$40.3 $41$46.4 $46.8*

$51.8 $48.9

$34.9$40.7 $41.1

$44.5$37.5

$41.3

$55.2

$65.8

$86.4

$101.1

$62.2

$74.2

$107**

EBITDA Margin

($ in millions)

Raised the Floor on Margins

14

* 1997 was a three-month transition year and is excluded from this comparison; 1996 reflects a 12-month period

** Midpoint of guidance provided on October 28, 2011 ($104-$110 million)

Note: See supplemental slides for EBITDA reconciliation and other important disclaimers regarding EBITDA.

3.6% 4.5% 7.7% 10.1% 11.1% 7.0% 3.3% 1.6% (1.3)% (0.7)% (3.3)% 1.4% 11.3% 10.5% 25.4% 27.0% 17.9% 14.0%

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Profitable Through Downturn

*Excludes $0.5 million, or $0.05 per diluted share, in acquisition costs

** Includes R&D tax credit of $0.16

Note: All earnings per share amounts adjusted for stock splits

$5.8

$15.0

$17.5

$6.4 $6.4

FY07 FY08 FY09 FY10 FY11

Net Income

$1.71 $1.49 $0.58** $0.64 $0.64*

Earnings per Share

$3.0

$5.5

FY2012

Q2

Q1

$8.5

$15.7

$19.2

$25.9 $25.0

$33.6

Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12

17.1%

8.6%

17.1%

20.0%

26.3%

Q2

FY11

Q3

FY11

Q4

FY11

Q1

FY12

Q2

FY12

$0.16

$0.08

$0.27$0.30

$0.55

Q2 FY11

Q3FY11*

Q4FY11

Q1FY12

Q2FY12

EPS

Revenue

EBITDA Margin

($ in millions)

Q2 FY2012: Solid Start

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Strong Cash Position

($ in millions)

Cash, Cash Equivalents and Investments

Cash available for acquisitions and organic growth

$36.8

$46.2

$58.6*

$43.1$37.7

3/31/08 3/31/09 3/31/10 3/31/11 9/30/11

Energy Steel:

all cash

$18 million

acquisition

No bank

debt at

9/30/11

* Excludes $16 million in unusually high upfront and near-term customer advances utilized to lock in raw material costs 17

$54.2

$75.7

$48.3

$44.3 $50.1 $48.8

$50 $41

$26.3

3/31/07 03/31/08 3/31/09 3/31/10 3/31/11 09/30/11

($ in millions)

Solid Core Backlog Strength

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$91.1

$75.1

$94.3

Reflect major multi-year projects, including U.S. Navy and major Middle East refineries

FY 2012 EXPECTATIONS

Revenue $104 to $110 million

Gross margin 32% to 33%

SG&A 15% of sales

Organic growth 25% to 30%

Varied order rates by quarter

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FY 2012 Expectations

Effective Tax Rate 33% to 35%

Guidance provided as of October 28, 2011

D I V E R S I F Y I N G

I M P R O V I N G

E X P A N D I N G

Executing our Strategy ● Driving Sustainable Growth

Strategy & Outlook

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STRATEGIC ACTIONS TO DRIVE GROWTH

Expand market opportunities: Create larger addressable market

• Win in rapid growth economies

• Advance Naval Nuclear Propulsion Program (NNPP) opportunities

• Expand nuclear power involvement

• Capitalize on renewable energy projects

Expand variable cost model

• Broaden subcontractor network: Increase flexibility with shorter supply chain

• Qualify additional North American and international subcontractors

Strengthen core business for margin retention

• Shortened lead times

• Reduced errors

• IT improvements in production and office

• Continuous improvement process (CIP)

Investments in personnel to expand capability and capacity

21

Strategic Actions to Drive Growth

Acquisition Strategy: Three Elements

Geographic Expansion • Asia, especially China

• Middle East

• South America

Product Diversification • Specialty heat exchangers

• Process vacuum equipment

• Packaged systems

• Process vessels

• Environmental

Market Diversification • Power

√ Nuclear

√ Alternative energy

√ Government / DOD projects

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Geographic Expansion

and/or Diversify

Products/Markets

Engineered-to-order products

for Energy Industry

Strong management team / quality

culture

Return exceeds cost

of capital

Up to $60 million in revenue

ACQUISITION CRITERIA

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Acquisition Criteria

FY 2012 Priorities

Advance market share in oil refining and petrochemical markets

Gain share in Asia and South America

Maintain strong position in Middle East

Continue to dominate North American market

Expand Energy Steel capabilities to increase sales and profit

Exploit synergies of Graham engineering and fabrication capabilities

Aggressively pursue sales to U.S. nuclear utilities

Capitalize on opportunities in new construction

Continue to develop Naval Nuclear Propulsion Program sales

channel

Continue to evaluate acquisitions

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Expected long-term energy demand growth resulting in capacity expansion

Record, high-quality backlog

Worldwide brand recognition

Sales model based on early engineering involvement

Expanding addressable market opportunities

Strong balance sheet

Acquisition opportunities

Results-oriented management team

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Investment Highlights

D I V E R S I F Y I N G

I M P R O V I N G

E X P A N D I N G

Executing our Strategy ● Driving Sustainable Growth

Supplemental Information

26

EBITDA Reconciliation

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* Data from FY1993 though FY2005 excludes discontinued operations and is unaudited; 1997 was a

three-month transition year and is excluded from this comparison; 1996 reflects a 12-month period.

** Graham believes that when used in conjunction with GAAP measures, EBITDA, which is a non-GAAP

measure, assists in the understanding of Graham’s operating performance.

Fiscal Years Ended March 31 2011 2010 2009 2008 2007 2006

GAAP operating profit $8,775 10,042$ 26,328$ 21,088$ 6,013$ 5,454$

Interest income 55$ 55$ 416$ 1,026$ 516$ 316$

Depreciation & amortization 1,648 1,119 1,005 885 887 793

EBITDA** 10,478$ 11,216$ 27,749$ 22,999$ 7,416$ 6,563$

2005* 2004* 2003* 2002* 2001* 2000*

GAAP operating profit (206)$ (1,969)$ (1,028)$ (1,296)$ (124)$ 332$

Interest income 55$ 54$ 125$ 98$ 342$ 346$

Depreciation & amortization 780 745 704 774 776 827

EBITDA** 629$ (1,170)$ (199)$ (424)$ 994$ 1,505$

1999* 1998* 1996* 1995* 1994* 1993*

GAAP operating profit 2,591$ 4,932$ 3,995$ 2,818$ 1,075$ 662$

Interest income 296$ 215$ 64$ - - -

Depreciation & amortization 820 804 706 732 771 807

EBITDA** 3,707$ 5,951$ 4,765$ 3,550$ 1,846$ 1,469$

($ in millions)

Acquisition Terms

• $18 million, all cash, no debt

• $2 million performance contingency for CY2011 & 2012

• Acquisition costs expensed: $0.05/share impact to Q3 2011

Energy Steel Financials

• Revenue of ~$18-$20 million

• Margins similar to Graham: GM: 30%-35+% OM: 13%-18+%

• Backlog of $6.8 million at 9/30/11

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Energy Steel Acquisition (Dec. 2010)

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EXPANDED

CUSTOMER BASE

End Users (Exxon Mobil, Chevron etc.)

- Original Equipment Manufacturers

(Dresser Rand, GE etc.)

- EPC Contractors (Jacobs, Fluor etc.)

- With Energy Steel Acquisition: 104

Nuclear Power Plants in U.S.

Diverse Markets & Expanded Customers

OIL REFINING

Conventional crude oil

Oil sands

Extra-heavy crude oil

Sour crude

Lube oil

CHEMICAL PROCESSING

Ethylene

Ammonia

Nitrogen

Methanol

Styrene

Polystyrene

Ethylene glycol

Detergent alcohols

Plastics, resins, fibers

Coal-to-liquids (CTL)

Gas-to-liquids (GTL)

Urea / fertilizer

Cogeneration

Waste-to-energy

Heat, power and light

Geothermal

Nuclear

In situ

OTHER APPLICATIONS

Edible oil / Oleochemicals

Biofuels:

Ethanol

Biodiesel

HVAC

Industrial gases

Cryogenic

POWER GENERATION

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North American Competition

Market Competitors

Refining vacuum distillation Gardner Denver

Chemicals/Petrochemicals Croll Reynolds; Schutte Koerting;

Gardner Denver

Turbomachinery OEM – refining,

petrochemical

Ambassador; SPX (Yuba); Krueger

Turbomachinery OEM – power and

power producer

Holtec; Babcock Thermal Engineering;

SPX (Yuba); Krueger

HVAC Alfa Laval; APV; ITT; Ambassador

Naval Nuclear Propulsion Program Joseph Oats; DCFAB

Nuclear Dubose; Consolidated; Tioga; Nova;

Maxim

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International Competition

Market Competitors

Refining vacuum distillation Gardner Denver; GEA Jet Pump; Korting

Hannover; Edwards

Chemicals/Petrochemicals Croll Reynolds; Schutte Koerting;

Gardner Denver; GEA Jet Pump; Korting

Hannover; Edwards

Turbomachinery OEM – refining,

petrochemical

Donghwa-Entec; Bumwoo; Oiltechnik;

Krueger; various local fabricators

Turbomachinery OEM – power and

power producer

Holtec; Babcock Thermal Engineering;

SPX (Yuba); Krueger

Improved

Operating Performance

Throughout Cycle

Selling Process • Re-branding

• Adding value

• VacAdemics

• VacWorks

• Technical support

• Redefining profit metrics

• Decision rights &

disciplined approach

• Gain market share

• Not every order is a good order

Operational Excellence • Capital plan

• Graham production system

• Focus on lead time reduction

• First time, every time

• Training

• Safety culture

• Continuous improvement

• Creating scale

• IT

• Outsourcing

• Variable costs

People Process • Accountability

• Policy deployment

• Performance management

• Change agents:

• IT, HR, OPS &

executive

• Alignment

• Engagement

Sustainability • Leadership commitment

• Long-term vision

• Balance financial results with

investing in the future

• Graham management system

• Succession planning

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Catalysts Changing Financial Performance

A Company-wide Approach to a Better Graham Today and in the Future

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

PRODUCTS: DIRECT CONTACT CONDENSER

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Products: Direct Contact Condenser

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

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Products: Surface Condenser

VITAL PROCESSING COMPONENTS CONDENSERS AND EJECTORS

An ejector system lowers the

pressure in the distillation column to

allow crude oil 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.

A condenser supports

a steam turbine and

enables the conversion

of maximum energy in

high pressure steam into

power.

REFINERY EJECTOR SYSTEM

CNOOC HUIZHOU REFINERY–CHINA

240,000 BBL/DAY REFINERY

Vital Processing Components

Growth Options

1. Increase ability to serve existing U.S.

nuclear power plants

2. Capitalize on planned U.S. new nuclear

power plant construction

3. Expand company to access and service

international nuclear power plants

Products

1. Heat exchangers

2. Vessels

3. Piping

4. Systems

5. Raw materials

6. Vacuum products

36

Nuclear Sector Growth Opportunities

NUCLEAR RENAISSANCE

37

Operating = Connected to grid

Under Construction = First concrete for reactor poured, or major refurbishment under way

Planned = Approvals, funding or major commitment in place, mostly expected in operation within 8-10 years

Proposed = Specific program or site proposals, expected operation mostly within 15 years

Source: World Nuclear Association, as of October 8, 2011

Nuclear Renaissance

Future Expansion:

This data represents

a more than 50%

increase in planned

and proposed

reactors since the

2007 WNA report

Country Operating Under

Construction Planned Proposed

USA 104 1 7 27

France 58 1 1 1

Japan 51 2 10 5

Other 61 8 39 80

China 14 27 51 120

Russia 32 10 14 30

South Korea 21 5 6 0

Germany 9 0 0 0

UK 18 0 4 9

Ukraine 15 0 2 20

Canada 17 3 3 3

Sweden 10 0 0 0

India 20 6 17 40

South Africa 2 0 0 6

Total 432 63 154 341