I t P t tiInvestor PresentationJeffrey Glajch, Vice President & CFOJune 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 presentation.

Graham CorporationFounded: 1936; IPO: 1968;

NYSE Amex: GHM $14.58

Common shares outstanding 9.85 million$Market capitalization $144 million

52-week price range $21.84 – $10.52Avg. daily trading volume (12 mos.) 100,053Stock splits:

► 5 for 4 1/2/2008

► 2 for 1 10/7/2008Ownership:

►Institutional 62.2%►Insider 2.8%

Note: Market data as of June 9, 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

26%

EjectorsHeat

Exchangersjec o s34%

Exchangers11%

Pumps6%

Aftermarket23%

U.S. 45%

International 55%

Note: All percentages based on Fiscal 2010 revenue of $62.2 million

Di ifi d M k tDiversified Markets

Chemical Processing Original Equipment

M f t

Refining41%

Processing35%

Manufacturers(Dresser Rand, GE etc.)

EPC Contractors(Jacobs, Fluor etc.)to

mer

s

41%Power &

Other24%

( , )

End Users(Exxon Mobil, Chevron etc.)C

ust

Note: Percentages based on Fiscal 2010 revenue of $62.2 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 Orders & Backlog Conversion

Refining $40.2 million Oman, Saudi Arabia, Taiwan, Brazil, China, Thailand, Colombia, USA

Ch i l P i $16 7 illi Vi t Th il dChemical Processing $16.7 million Vietnam, Thailand, Malaysia, India, USA

Power Generation & Other $51.4 million USA, China

Total Orders $108.3 million

Estimated Backlog ConversionTotal backlog

at 3/31/10: $94.3 million

50% to 60% in FY 2011

20% to 30% in FY 2012

10% to 20% in FY 2013 & Beyond

Estimated Backlog Conversion

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

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

Financial PerformanceFinancial PerformanceFinancial PerformanceFinancial Performance

($ in millions)

Captured Revenue in Expansion Cycle

$86.4$101.1

$41.3

$55.2$65.8 $62.2

$24 8

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

$24.8

$13.8

Q4 2009 Q4 2010FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 Q4 2009 Q4 2010

EBITDA Margins:EBITDA Margins:Improved Profitability Cycle over Cycle

Previous Cycle: FY1993 to 2000* Current Cycle: FY2005 to Present

$86.4

$101.1

$95

$110

($ in millions)FY98 to FY00:33% decline in

FY09 to FY10:38% decline in

$55.2

$65.8 $62.2$65

$80

33% decline in revenue

38% decline in revenue

$41.3

$55.2

$40.3 $41.0$46.4 $46.8

$51.8$48.9

$34.9$35

$50

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010$20

FY1993 FY1994 FY1995 FY1996 FY1998 FY1999 FY2000

3.6% 4.5% 25.5%10.5%11.3%1.4%3.3%7.0%11.1%10.1%7.7% 27.1% 19.0%

**

Margin 3.6% 4.5% 25.5%10.5%11.3%1.4%3.3%7.0%11.1%10.1%7.7% 27.1% 19.0%

* Data from FY1993 though FY2000 excludes discontinued operations.** 1997 was a three-month transition year and is excluded from this comparison; 1996 reflects a 12-month period.Note: See supplemental slides for EBITDA reconciliation.

Margin

N t I d EPS($ in millions)

Net Income and EPS

$15.0$17.5

$3.6$5.8 $6.4

$3.6

$0 6

FY2006 FY2007 FY2008 FY2009 FY2010Q4 2009 Q4 2010

$0.6

Earnings per Share $1.71$1.49$0.58**$0.38 $0.64 $0.35 $0.06

Note: All earnings per share amounts adjusted for stock splits

** 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

$74.6

$8.5$5.8 $5.1

$0.2$3.3

($ in millions) ( )

$36.8$46.2

$2.7$11.0

$15.1

$

($17.9)FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

3 3%0 2%7 7%10 5%20 5% (28 8)%*Percent of

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

3.3%0.2%7.7%10.5%20.5% (28.8)%

* Based on FY2010 revenue of $62.2 million

RevenueIncludes negotiated customer deposits

St t & O tl kStrategy & Outlook

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

D ti C l Shift$107.1 $108.3

($ in millions)

Dramatic Cycle Shift

$54.2

$75.7

$48 3

$94.3

$49.9

$66.2

$86.5$73.9

($ )

$22.4$33.1

$48.3$49.9

FY2005 FY2006 FY2007 FY2008 FY2009 FY 2010

$51.6OrderVariation

Orders Backlog($ in millions)

$27.8$17.5

$8.1

$20.5

$8.8

$29.6

$18.3

Variation($ )

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

Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410

$25 million U.S. Navy order

gquarter basis

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√ Alternative energy√ Government / DOD projects

• Environmental

A i iti C it iAcquisition CriteriaEngineered-

to-orderto-order products for

Energy Industry

Geographic Expansion

and/or

Strong management

team / Up to $60 million and/or

Diversify Products/Markets

customer & quality minded

$60 million in revenue

Return exceeds cost

f it lof capital

I t t Hi hli htInvestment HighlightsExpected long-term energy demand growth

resulting in capacity expansionresulting in capacity expansion

Worldwide brand recognition

Sales model based on early engineering involvement

Demonstrated success in Asia, Middle EastDemonstrated success in Asia, Middle East and South America

Strong balance sheet

Acquisition opportunities

Results-oriented management team

Supplemental Slides

EBITDA ReconciliationEBITDA Reconciliation

Current Cycle 2005 2006 2007 2008 2009 2010

GAAP operating profit (206)$ 5,454$ 6,013$ 21,088$ 26,328$ 10,042$ Depreciation & amortization 780 793 887 989 1,111 1,797 EBITDA 574$ 6 247$ 6 900$ 22 077$ 27 439$ 11 839$EBITDA 574$ 6,247$ 6,900$ 22,077$ 27,439$ 11,839$

Previous Cycle 2000* 1999* 1998* 1996* 1995* 1994* 1993*y

GAAP operating profit 332$ 2,591$ 4,932$ 3,995$ 2,818$ 1,075$ 662$ Depreciation & amortization 827 820 804 706 732 771 807EBITDA 1,159$ 3,411$ 5,736$ 4,701$ 3,550$ 1,846$ 1,469$

* Data from FY1993 though FY2000 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.

St th d G P fit M iStrengthened Gross Profit Margin($ in millions)

$86.4$101.1

39 5% 41.3%

$41.3

$55.2$65.8 $62.2

28.9%

25 6%

35.7%

39.5% .3%

42.1%38.8%

18.2%

25.6%

31.1%

$24.8 $13.8

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010Gross Margin

Q4 2009 Q4 2010

Revenue

* Estimated FY 2011 gross margin is 27% to 31% on estimated revenue of $65 to $72 million. Guidance provided as of March 31, 2010.

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

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

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

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

P M k tPower Market

• Waste to energy renewables

• GeothermalUnited States

• NuclearStates

• Growing power requirements

• NuclearH d th l

China and India • Hydro, geothermal,

fossil fuelsIndia

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

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.