Dan Thoren: Sure. Let me just probably explain both of them. So, Graham Manufacturing in Batavia that has been involved in refinery and petrochem plants, mixed vacuum equipment that is based on a convergent, diverging nozzle. It’s essentially an ejector that produces vacuum. And that is not to be confused with torpedo ejection systems that are on submarines because torpedo ejection submarines on submarines are used to basically just eject the torpedo out of the submarine and you do that with your €“ you’re pumping water into the torpedo tube and pushing the torpedo out of the submarine. So, while they have the same descriptor, they’re greatly different applications, and equipment. The torpedo ejection system on a submarine is really a very sophisticated pump that’s pumping water.
And then the ejector used in power systems and refinery applications and petrochem applications is more of a static piece of equipment that’s based on a convergent divergent nozzle to generate vacuum.
Gary Schwab: Yes, okay. And when I dug into it, it says it’s a 10-stage system and it has to be super silent to the subs.
Dan Thoren: Yes. It’s kind of interesting in the old movies you would see the captain of the torpedo saying, launch the torpedo and you hear this big whoosh because they used to launch them with air pressure and the air really gave the submarine position away. Because it was so noisy. Now, they launch them with water and so they’re much quieter.
Gary Schwab: And your sole source on these for Virginia?
Dan Thoren: Yes.
Gary Schwab: Okay. Also on Slide 10, you didn’t mention, but you had in the past about regulators and alternators. And didn’t you just win your third five-year contract to manufacture alternators and regulators for the MK 48 torpedo?
Dan Thoren: Correct. Yes. So that is lumped into that torpedo power & propulsion hardware. And Barber-Nichols is involved in several different programs, some that are brand new, some that are more in the technology demonstration realm, some that are in production. And so, we tended to more genericize that and just describe that as torpedo power & propulsion hardware.
Gary Schwab: Okay. But your source on those also, right?
Dan Thoren: Correct.
Gary Schwab: And it’s not just for the Virginia class, but for four sub classes, for Los Angeles, Ohio, Virginia, and Columbia subs covers a lot of torpedoes.
Dan Thoren: Yes, the heavyweight torpedo is used on all of the different submarines.
Gary Schwab: Okay. And you’re the only vendor on that for the Navy, that’s not qualified?
Dan Thoren: Yes, for the components that we’re supplying, obviously we’re supplying those to a larger defense integrator prime that is providing the complete torpedo to the Navy.
Gary Schwab: And the Navy needs a lot more of those and that’s why you’re getting the CNC milling and threading machine so that you can accelerate your production.
Dan Thoren: Yes, we’ve been asked to accelerate the production.
Operator: Our next question is from Bill Baldwin with Baldwin Anthony Securities. Please proceed.
Bill Baldwin: Good morning, Dan and Chris.
Dan Thoren: Hey, Bill.
Bill Baldwin: Is the Graham Corporation now, pretty much have all the key personnel positions filled, Dan and Chris that need to be filled to execute your game plan going forward here?
Dan Thoren: I would say the key ones, yes, Bill, there’s certainly still some very important holes to fill as we go forward, but the key ones are pretty much filled at this point and we’re able to execute much better than we had in the past. So, yes, I would say so.
Chris Thome: The only thing I would add to that is just like every other company, labor does continue to be a challenge, we are making substantial progress in that area and have seen quite a bit of increase in direct labor over the last year. So, just like everyone else, the market for engineers and welders and skilled labor continues to be challenging, but we’re navigating our way through that fairly well.
