Graham Corporation Announces $3.9 Million Asian Petrochemical Contract

Business Wire, August 14, 2006

BATAVIA, N.Y. -- Graham Corporation (AMEX: GHM) announced today that it has concluded negotiations for and was awarded a $3.9 million order from a turbomachinery OEM for surface condensers. The surface condensers are to be installed in a Southeast Asian ethylene production plant that is part of an integrated petrochemical and refining complex. The surface condensers are scheduled for shipment during the fourth quarter of fiscal 2008, which ends on March 31, 2008. Revenue for this contract will be paid in U.S. dollars and recognized on a percentage-of-completion basis during the third and fourth quarters of fiscal 2008.

Jim Lines, President and Chief Operating Officer of Graham, commented, "We have supplied equipment to this particular end-user in the past, and based on our proven ability to deliver high quality products and our effective project execution, we were able to secure this significant contract. The long delivery schedule and timing of this order confirms the recent trends we have been seeing. Accelerated purchase decisions by our customers, and within the overall industry, are becoming more common in the effort to secure the necessary engineering and manufacturing resources. This challenges us to find methods to mitigate escalating material costs without negatively affecting cash flow, which we did in this case through fixed pricing from our key suppliers and good cash flow terms from the customer."

Mr. Lines went on to say, "We believe we are in an extended upswing in the market cycle for both the petrochemical and refining industries and anticipate further extensions to purchase decision timelines. We are in the midst of a strong investment environment for the refining industry which is expected to last beyond 2010, and for the petrochemical industry we believe we are approaching the mid-point of a 5 year cycle. Additionally, as alternative energy sources are being investigated, this emerging industry is expected to expand into the next decade. We believe Graham is well-positioned to capitalize on these growth trends both domestically and on in the international playing field."

ABOUT GRAHAM CORPORATION

With world-renowned engineering expertise in vacuum and heat transfer technology, Graham Corporation is a designer, manufacturer and global supplier of ejectors, pumps, condensers, vacuum systems and heat exchangers. Over the past 70 years, Graham Corporation has built a reputation for top quality, reliable products and high-standards of customer service. Sold either as components or complete system solutions, the principle markets for Graham's equipment are the petrochemical, oil refining and electric power generation industries, including cogeneration and geothermal plants. Graham equipment can be found in diverse applications, such as metal refining, pulp and paper processing, ship-building, water heating, refrigeration, desalination, food processing, drugs, heating, ventilating and air conditioning.

Graham's reach spans the globe. Its equipment is installed in facilities from North and South America to Europe, Asia, Africa and the Middle East. More information regarding Graham can be found at its website: www.graham-mfg.com

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in Graham's Annual and Quarterly Reports filed with the Securities and Exchange Commission, include Graham's ability to successfully execute the contract, that the estimated value of the production contract will be realized, customer preferences and changes in market conditions in the industries in which Graham operates. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated.