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A $1.6 million lawsuit settlement more than offset continued operating losses caused by a 13 percent drop in sales and helped Graham Corp. increase its second-quarter profits by 82 percent, the Batavia manufacturer said Thursday.

And with the economy picking up, especially as rising oil prices spur activity in its key petrochemical and power generation markets, Graham officials said Thursday they expect the firm's operations to be profitable during the second half of its fiscal year.

"Things are looking up," said Alvaro Cadena, Graham's president and chief executive officer.

Graham also is getting a boost from the weakness in the U.S. dollar, which is helping to make the condensers and heat exchanges it sells outside the United States more competitively priced, while raising the domestic cost of products made by foreign firms, Cadena said.

In addition, Graham has seen a significant increase in its flow of new orders and its backlog, signaling a reversal of the weakness that has hurt the company's earnings in recent quarters.

The company booked 32 percent more orders during the quarter that ended in September, with orders rising to $10.4 million from $7.9 million a year ago. The company's backlog of orders also strengthened, growing by 35 percent to $21.2 million at the end of September from $15.7 million a year earlier.

In addition, Graham's work is becoming more profitable, with gross margins, which had dwindled to 13 percent during the second quarter, compared with 23 percent a year ago, expected to rebound as sales improve, Cadena said.

Graham's second-quarter profits rose to $381,000, or 22 cents per share, from $209,000, or 13 cents per share, a year ago. Sales slid to $10.9 million from $12.6 million.

All of the profits, however, were due to a $1.59 million settlement that Graham received to settle a breach-of-contract lawsuit that the Batavia manufacturer filed against Toshiba International over the cancellation of an order.


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