Revenue grew 18% to $92 million for fiscal 2019; loss per share
was $0.03, adjusted EPS was $0.51
Backlog remains strong at $132 million; Fiscal 2019 book-to-bill
ratio was 1.1x
Expecting fiscal 2020 revenue between $95 million and $100
million; represents 14% to 20% growth, excluding commercial nuclear
utility business which is for sale
BATAVIA, N.Y.–(BUSINESS WIRE)–Graham
Corporation (NYSE: GHM), a global business that designs,
manufactures and sells critical equipment for the oil refining,
petrochemical, power and defense industries, today reported financial
results for its fourth quarter and year ended March 31, 2019 (“fiscal
Net sales in the fourth quarter of fiscal 2019 were $23.6 million, up 7%
compared with the fourth quarter of the fiscal year ended March 31, 2018
(“fiscal 2018”). Net loss in the fiscal 2019 fourth quarter was $4.6
million, or $0.46 loss per diluted share. Excluding non-cash charges for
goodwill and intangible and other long-lived asset impairments, adjusted
net income and adjusted EPS, both of which are non-GAAP measures, for
the fourth quarter of fiscal 2019 were $0.8 million, and $0.08,
respectively. Net income and earnings per share (“EPS”) in the fiscal
2018 fourth quarter were $0.8 million and $0.09, respectively. Excluding
the impact of the U.S. Tax Cuts and Jobs Act tax reform legislation
passed in December 2017, adjusted net income and adjusted EPS, both of
which are non-GAAP measures, for the fourth quarter of fiscal 2018 were
$0.6 million and $0.07, respectively. Refer to the Company’s disclosures
regarding the use of non-GAAP measures later in this release.
Net sales for fiscal 2019 were $91.8 million, up 18% compared with $77.5
million in fiscal 2018. Fiscal 2019 net loss was $0.3 million, or a loss
of $0.03 per diluted share, compared with a net loss of $9.8 million, or
$1.01 per diluted share, in fiscal 2018. Excluding unusual charges,
adjusted net income for fiscal 2019 was $5.0 million, or $0.51 per
diluted share, compared with adjusted net income of $1.8 million, or
$0.18 per diluted share, in fiscal 2018, all on a non-GAAP basis. Refer
to the Company’s disclosures regarding the use of non-GAAP measures
later in this release.
James R. Lines, Graham’s President and Chief Executive Officer,
commented, “We had solid revenue growth in the quarter and the year, as
expected. However, the mix of projects and performance of our commercial
nuclear utility business dampened gross margins throughout the year.
While disappointing, we remain focused on solid execution and quality
service for our customers, and strong cost discipline to strengthen our
earnings potential. Likewise, we will continue to invest in our business
in line with our strategy to drive our long-term future.”
He added, “Our investments in personnel for our strategy are affecting
margins in the near term but remain important as we identify and capture
opportunities to achieve our growth and profitability goals. We are
encouraged by our solid order activity and strong backlog, which give us
confidence in a healthy outlook for the coming fiscal year and beyond.”
Fourth Quarter Fiscal 2019 Sales Summary
accompanying financial tables for a breakdown of sales by industry and
Consolidated net sales were up $1.4 million, or 7%, driven by $3.8
million and $1.7 million increases in sales to the
chemical/petrochemical and refining industries, respectively. These
increases were partially offset by $2.8 million and $1.2 million of
lower sales to the Company’s other commercial, industrial and defense
markets, and the power industry, respectively.
From a geographic perspective, U.S. sales represented 70% of
consolidated sales in the fiscal 2019 fourth quarter compared with 66%
in the fourth quarter of fiscal 2018. International sales were 30% of
consolidated sales in the fiscal 2019 quarter, compared with 34% in the
prior-year comparable period. U.S. based sales were driven by the
chemical/petrochemical and refining markets noted above.
Fluctuations in Graham’s sales among geographic locations and
industries can vary measurably from quarter-to-quarter based on the
timing and magnitude of projects. Graham does not believe that
such quarter-to-quarter fluctuations are indicative of business trends,
which it believes are more apparent on a trailing twelve month basis.
Fourth Quarter Fiscal 2019 Operating Performance Review
|($ in millions except per share data)||Q4 FY19||Q4 FY18||Change|
|Operating (loss) profit||$||(5.8||)||$||0.7||$||(6.5||)|
|Net (loss) income||$||(4.6||)||$||0.8||$||(5.4||)|
|Non-GAAP financial measures:|
|Adjusted operating profit||$||0.6||$||0.7||$||(0.1||)|
|Adjusted operating margin||2.6||%||3.3||%|
|Adjusted net income||$||0.8||$||0.6||$||0.2|
|Adjusted diluted EPS||$||0.08||$||0.07||$||0.01|
|Adjusted EBITDA margin||5.8||%||6.3||%|
Refer to pages 11 and 12 of this press release.
Graham believes that, when used in conjunction with measures prepared in
accordance with GAAP, adjusted operating profit, adjusted operating
margin (adjusted operating profit as a percentage of sales), adjusted
net income, adjusted diluted EPS, adjusted EBITDA and adjusted EBITDA
margin (adjusted EBITDA as a percentage of sales), which are non-GAAP
measures, help in the understanding of its operating performance.
Moreover, Graham’s credit facility also contains ratios based on EBITDA. See
the attached tables for additional important disclosures regarding
Graham’s use of adjusted operating profit, adjusted operating margin,
adjusted net income, adjusted diluted EPS, adjusted EBITDA and
adjusted EBITDA margin as well as reconciliations of operating (loss)
profit to adjusted operating profit and reconciliations of net (loss)
income to adjusted net income and adjusted EBITDA. This
disclosure regarding Graham’s use of non-GAAP measures for the fourth
quarters also applies to fiscal year data reflected later in this
The results for the fiscal 2019 and 2018 fourth quarters were relatively
comparable on a non-GAAP basis, with adjusted EPS of $0.08 in the fiscal
2019 fourth quarter compared with $0.07 in the fiscal 2018 fourth
quarter. While gross margin was lower in the fiscal 2019 quarter, net
income benefited from higher interest and other income.
Fourth quarter fiscal 2019 gross profit and margin were unfavorably
impacted by project mix, including the commercial nuclear utility
Selling, general and administrative (“SG&A”) expenses were $4.2 million
in the fourth quarters of both fiscal 2019 and 2018. SG&A as a percent
of sales was approximately 18% and 19% in the fourth quarters of fiscal
2019 and fiscal 2018, respectively.
Given ongoing challenges in the nuclear industry faced by relatively
small market participants, during the fourth quarter of fiscal 2019 the
Company decided to divest its commercial nuclear utility business,
Energy Steel. Upon evaluating the potential market value of the Energy
Steel business, Graham determined that the intangible assets, goodwill,
and other long-lived assets were impaired. Accordingly, the Company
recorded a $6.4 million impairment charge, $5.3 million net of tax, in
the fiscal 2019 fourth quarter.
Jeffrey Glajch, Graham’s Vice President and Chief Financial Officer,
noted, “While Energy Steel was successful in prior years, the changes in
the commercial nuclear utility industry over the last several years have
caused significant erosion of this business. Accordingly, we have
decided that it has more potential with a different partner and we are
in discussions to sell the business.”
During the fourth quarter of fiscal 2019, Graham’s effective tax rate
was not meaningful due to the non-deductibility of the goodwill portion
of the commercial nuclear utility business write down. The prior year’s
fourth quarter effective tax rate benefited from the impact of adopting
the 2017 U.S. Tax Cuts and Jobs Act.
Fourth quarter fiscal 2019 adjusted net income and adjusted diluted EPS
excluded $5.3 million of net-of-tax impairment charges. Fourth quarter
fiscal 2018 adjusted net income and adjusted diluted EPS excluded a $0.2
million tax benefit for adoption of the new federal tax rates as a
result of the tax reform legislation adopted in December 2017.
Adjusted EBITDA (defined as consolidated net (loss) income before net
interest income, income taxes, depreciation and amortization, goodwill
and other impairments and other charges associated with the revaluation
of the commercial nuclear utility business, and a nonrecurring
restructuring charge, where applicable) was approximately the same
during the fiscal 2019 and fiscal 2018 fourth quarters.
Full Year Fiscal 2019 Review
|($ in millions except per share data)||FY19||FY18||Change|
|Non-GAAP financial measures:|
|Adjusted operating profit||$||4.0||$||1.5||$||2.5|
|Adjusted operating margin||4.4||%||1.9||%|
|Adjusted net income||$||5.0||$||1.8||$||3.2|
|Adjusted diluted EPS||$||0.51||$||0.18||$||0.33|
|Adjusted EBITDA margin||7.7||%||5.4||%|
Refer to pages 11 and 12 of this press release.
The improvement in operating loss, operating margin, net loss and
diluted EPS during fiscal 2019 compared with fiscal 2018 was primarily
driven by the change in impairment charges for goodwill and intangible
and other long-lived assets. Adjusted net income and adjusted EPS
exclude such charges as well as other items, resulting in a $3.2 million
and $0.33 improvement over the prior year, respectively, driven by
higher sales and improved operating performance.
International sales grew 27% to $32.4 million in fiscal 2019 and
represented 35% of total sales, compared with $25.6 million, or 33% of
sales in the prior year. Sales to the U.S. grew 14% to $59.4 million, or
65% of fiscal 2019 net sales, compared with $51.9 million, or 67% of
fiscal 2018 net sales.
The increase in gross profit and margin were driven by higher volume
stemming from the 18% increase in sales when compared with the prior
year, as well as ongoing improvement to backlog quality and project mix,
partially offset by higher production costs.
SG&A in fiscal 2019 was $17.9 million, up 13%, or $2.1 million. The
increase in SG&A was primarily due to higher compensation costs for new
personnel, higher sales-related costs, and higher performance-based
compensation. As a percent of sales, SG&A was 20% for both fiscal 2019
Similar to the fourth quarter, Graham’s effective tax rate for fiscal
2019 was not meaningful due to the non-deductibility of the goodwill
portion of the commercial nuclear utility business write down. Fiscal
2018 results were impacted by a $0.8 million favorable adjustment to
income taxes upon implementation of the 2017 U.S. Tax Cuts and Jobs Act,
which also had a beneficial impact on the fiscal 2019 overall effective
Fiscal 2019 adjusted net income and adjusted diluted EPS excluded $5.3
million of net-of-tax impairment charges. Fiscal 2018 adjusted net
income and adjusted diluted EPS excluded $12.0 million of net-of-tax
impairment charges, $0.2 million of net-of-tax bad debt charges
associated with the revaluation of the Company’s commercial nuclear
utility business, $0.2 million for a net-of-tax nonrecurring
restructuring charge and a $0.8 million tax benefit for adoption of the
new federal tax rates as a result of the 2017 U.S. Tax Cuts and Jobs Act.
Adjusted EBITDA for fiscal 2019 benefited from higher revenue and gross
margin improvement, partially offset by investments in SG&A.
Balance Sheet Strength Supports Growth
Cash, cash equivalents and investments at March 31, 2019 were $77.8
million, up from $76.5 million at March 31, 2018.
Fiscal 2019 cash provided by operations was $7.9 million, compared with
$8.5 million in fiscal 2018. The decrease was primarily the result of
timing of changes in working capital, partially offset by higher
adjusted net income.
Capital expenditures were $2.1 million in fiscal 2019, approximately the
same level as the prior year. The Company expects capital expenditures
for fiscal 2020 to be between $2.5 million and $2.8 million, the
majority of which are expected to be used for productivity enhancements.
Dividend payments were $3.8 million and $3.5 million in fiscal 2019 and
fiscal 2018, respectively.
Graham had neither borrowings under its credit facility, nor any
long-term debt outstanding, at March 31, 2019.
Backlog Level Indicates Continued Growth
Backlog at the end of fiscal 2019 was $132.1 million, near its record
level of $133.6 million at the end of the third quarter, and up 12% from
$117.9 million at the end of the prior fiscal year. Excluding the
commercial nuclear utility business which is held for sale, backlog at
the end of fiscal 2019 was $124.1 million.
The Company believes that its backlog mix by industry highlights the
success of its diversification strategy to increase sales to the U.S.
Navy. Backlog by industry at March 31, 2019 was approximately:
- 49% for U.S. Navy projects
- 22% for refinery projects
- 19% for chemical/petrochemical projects
7% for power projects, including commercial nuclear utility (of which
89% is for the business held for sale)
- 3% for other industrial applications
The expected timing for the Company’s backlog to convert to sales is as
- Within next 12 months: 55% to 60%
- Within 12 to 24 months: 10% to 15%
- Beyond 24 months: 25% to 35%
Orders were $21.6 million in the fourth quarter of fiscal 2019, driven
by the refining and chemical/petrochemical industries in North America.
In the fiscal 2019 fourth quarter, orders from U.S. and international
customers were nearly evenly split with $11.1 million from the U.S and
$10.5 million from international markets. This compares with total
orders of $43.5 million in the fourth quarter of fiscal 2018, of which
81% were from the U.S. and 19% were from international markets. The
fiscal 2018 fourth quarter orders included $24.5 million, or 56% of the
total, from other commercial, industrial and defense markets, which
includes the U.S. Navy.
Orders for fiscal 2019 were $101.2 million, compared with $112.2 million
in fiscal 2018. Excluding orders from the Company’s other commercial,
industrial and defense markets which benefited from significant U.S.
Navy orders in fiscal 2018, orders from the Company’s other markets
increased by $15.9 million in fiscal 2019, driven by orders from the
chemical/petrochemical industry which were up $20.8 million. Orders from
U.S. customers were $62.2 million, or 61% of the total, and orders from
international markets were $39 million, or 39% of the total, in fiscal
2019. Approximately 35% of international orders were from the Middle
East, 27% were from Canada and 27% were from Asia. In fiscal 2018, 69%
of orders were from U.S. customers and 31% were international. The
fiscal 2019 book-to-bill ratio was 1.1x.
Graham expects that the balance between domestic and international
orders, as well as orders by industry, will continue to be variable
Introducing FY 2020 Guidance
Graham is also announcing its fiscal 2020 guidance, as follows:
Revenue anticipated to be between $95 million and $100 million,
excluding the commercial nuclear utility business which is held for
sale. For fiscal 2019, consolidated revenue excluding that business
was $83.5 million.
- Gross margin expected to be between 23% and 24%
- SG&A expense expected to be between $17 million and $18 million
- Effective tax rate anticipated to be approximately 20%
Mr. Lines concluded, “I believe that the energy cycle continues to show
signs of recovery, which is embedded in our fiscal 2020 expectation for
14% to 20% revenue growth for our ongoing business. Our strong pipeline
of projects combined with the Navy work currently in backlog provides us
solid confidence in our outlook for the year. Additionally, we remain
very active in the pursuit of strategic opportunities to put our capital
to work and complement our organic growth initiatives.”
Webcast and Conference Call
Graham’s management will host a conference call and live webcast today
at 11:00 a.m. Eastern Time to review its financial condition and
operating results for the fourth quarter and full year fiscal 2019, as
well as its strategy and outlook. The review will be accompanied by a
slide presentation which will be made available immediately prior to the
conference call on Graham’s website at www.graham-mfg.com
under the heading “Investor Relations.” A question-and-answer session
will follow the formal presentation.
Graham’s conference call can be accessed by calling (201) 689-8560.
Alternatively, the webcast can be monitored on Graham’s website at www.graham-mfg.com
under the heading “Investor Relations.”
A telephonic replay will be available from 2:00 p.m. ET today through
Thursday, June 6, 2019. To listen to the archived call, dial (412)
317-6671 and enter conference ID number 13689951. A transcript of the
call will be placed on Graham’s website, once available.
ABOUT GRAHAM CORPORATION
Graham is a global business that designs, manufactures and sells
critical equipment for the energy, defense and chemical/petrochemical
industries. Energy markets include oil refining, cogeneration, and
alternative power. For the defense industry, the Company’s equipment is
used in nuclear propulsion power systems for the U.S. Navy. Graham’s
global brand is built upon world-renowned engineering expertise in
vacuum and heat transfer technology, responsive and flexible service and
unsurpassed quality. Graham designs and manufactures custom-engineered
ejectors, vacuum pumping systems, surface condensers and vacuum systems.
Graham’s equipment can also be found in other diverse applications such
as metal refining, pulp and paper processing, water heating,
refrigeration, desalination, food processing, pharmaceutical, heating,
ventilating and air conditioning. Graham’s reach spans the globe and its
equipment is installed in facilities from North and South America to
Europe, Asia, Africa and the Middle East.
Graham routinely posts news and other important information on its
where additional comprehensive information on Graham Corporation and its
subsidiaries can be found.
Safe Harbor Regarding Forward Looking Statements
This news release 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,”
“confidence,” “projects,” “typically,” “outlook,” “anticipates,”
“believes,” “appears,” “could,” “opportunities,” “seeking,” “plans,”
“aim,” “pursuit,” “look towards” 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, expected expansion and growth opportunities within
its domestic and international markets, anticipated revenue, the timing
of conversion of backlog to sales, market presence, profit margins, tax
rates, foreign sales operations, its ability to improve cost
competitiveness, customer preferences, changes in market conditions in
the industries in which it operates, changes in commodities prices, the
effect on its business of volatility in commodities prices, changes in
general economic conditions and customer behavior, forecasts regarding
the timing and scope of the economic recovery in its markets, its
acquisition and growth strategy and the expected performance of Energy
Steel & Supply Co. and its operations in China and other international
locations, 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 Report filed
with the Securities and Exchange Commission, included 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 news release.
FINANCIAL TABLES FOLLOW.
|Fourth Quarter Fiscal 2019|
|Consolidated Statements of Operations|
(Amounts in thousands, except per share data)
|Three Months Ended||Year Ended|
|March 31,||March 31,|
|2019||2018||% Change||2019||2018||% Change|
|Cost of products sold||18,843||17,218||9||%||69,922||60,559||15||%|
|Other expenses and income:|
|Selling, general and administrative||4,123||4,171||(1||%)||17,641||15,533||14||%|
|Selling, general and administrative – amortization||59||59||0||%||237||236||0||%|
|Goodwill and other impairments||6,449||–||N/A||6,449||14,816||(56||%)|
|Operating (loss) profit||(5,833||)||730||N/A||(2,418||)||(13,926||)||(83||%)|
|(Loss) income before provision for income taxes||(5,214||)||997||N/A||(145||)||(12,854||)||(99||%)|
|(Benefit) provision for income taxes||(661||)||164||N/A||163||(3,010||)||N/A|
|Net (loss) income||$||(4,553||)||$||833||N/A||$||(308||)||$||(9,844||)||(97||%)|
|Per share data:|
|Net (loss) income||$||(0.46||)||$||0.09||N/A||$||(0.03||)||$||(1.01||)||(97||%)|
|Net (loss) income||$||(0.46||)||$||0.09||N/A||$||(0.03||)||$||(1.01||)||(97||%)|
|Weighted average common shares outstanding:|
|Dividends declared per share||$||0.10||$||0.09||$||0.39||$||0.36|
|N/A: Not Applicable|
|Fourth Quarter Fiscal 2019|
|Consolidated Balance Sheets|
(Amounts in thousands, except per share data)
|Cash and cash equivalents||$||15,021||$||40,456|
|Trade accounts receivable, net of allowances ($33 and $339|
|at March 31, 2019 and 2018, respectively)||17,582||17,026|
|Prepaid expenses and other current assets||1,333||772|
|Income taxes receivable||1,073||1,478|
|Assets held for sale||4,850||–|
|Total current assets||134,783||115,400|
|Property, plant and equipment, net||17,071||17,052|
|Prepaid pension asset||4,267||4,369|
|Other intangible assets, net||–||3,388|
|Liabilities and stockholders’ equity|
|Current portion of capital lease obligations||$||51||$||88|
|Accrued expenses and other current liabilities||2,933||2,885|
|Liabilities held for sale||3,525||–|
|Total current liabilities||54,887||37,295|
|Capital lease obligations||95||55|
|Deferred income tax liability||1,056||1,427|
|Accrued pension liability||662||565|
|Accrued postretirement benefits||604||642|
|Preferred stock, $1.00 par value, 500 shares authorized||–||–|
|Common stock, $.10 par value, 25,500 shares authorized|
10,650 and 10,579 shares issued and 9,843 and 9,772 shares
|Capital in excess of par value||25,277||23,826|
|Accumulated other comprehensive loss||(8,833||)||(8,250||)|
|Treasury stock (807 shares at each of March 31, 2019 and 2018)||(12,390||)||(12,296||)|
|Total stockholders’ equity||98,966||103,349|
|Total liabilities and stockholders’ equity||$||156,270||$||143,333|
For more information:
Jeffrey F. Glajch
President – Finance and CFO
Phone: (585) 343-2216
Strainprint™ Technologies Welcomes Organic Medical Cannabis Producer to Growing List of Subscribers
Strainprint Technologies Ltd, the leader in cannabis data and analytics is pleased to expand their nation-wide coverage with the addition of Stewart Farms.
Stewart Farms is a late-stage applicant headquartered in Alberta that is building a 100,000 sq. ft. vertical aquaponics farm in Saint Stephens, New Brunswick. They will be utilizing automation, vertical farming, and land-based aquaculture to produce medical grade organic cannabis for both recreational and medical markets in Canada. All of their products will be free of herbicides, pesticides and synthetic nutrients. At full capacity, they will reach more than 10,000 kgs per year of organically farmed cannabis and more than 200,000 kgs of organic tilapia.
Stewart Farms’ long term vision is to deliver tools and products to support future customers and patients during their health and wellness journeys. “Through our partnership with Strainprint we gain direct access to their incomparable data and analytics tools. This will aid us in educating a wider audience on the medical benefits and best practices of cannabis-based medicine,” said Tanner Stewart, Co-founder & CEO of Stewart Farms. “We know our customers are looking to consume more than dried cannabis. We know Canadians of all legal ages are trying to sort through their personal engagement with cannabis as a medicine. What we want to know, on an ongoing basis, is what is and is not working for people. Strainprint’s patient-led data services will give us the insight needed to create custom products and further understand the benefits of our existing products. Finally, our goal is to partner with companies and teams that truly have people’s best interest at heart. Caring about a patient’s success is what makes up the core of the Strainprint team. We couldn’t be happier to move forward with them at our side.”
Stewart Farms will access the Strainprint Analytics web platform, the most sophisticated cannabis analytics platform available to improve product development. Strainprint Analytics is built on top of the largest and most granular scientific data set of its kind in the world, with more than 1.3 million anonymized, patient reported medical cannabis outcomes and more than 65 million data points on strain efficacy.
“We’re thrilled to provide our real-time, crowd sourced data to an environmentally conscious company that uses innovative, cutting edge farming technology to produce top-tier medical cannabis,” said Strainprint CEO, Andrew Muroff. “Our organizations are equally committed to improving lives using cannabis therapy, and our shared core motivation is to provide guidance and support to help cannabis patients achieve their health goals.”
SOURCE Strainprint Technologies Ltd.
Field Trip Ventures Inc. Retains KCSA Strategic Communications as Public Relations Counsel
Greenery Map, the world’s first and only cannabis search engine to allow users to search for cannabis products based on their desired mood, medicinal use, and method of consumption, is now offering users – both businesses and consumers – the opportunity to register and connect to the app in an entirely mobile way. Previously, businesses were required to access GreeneryMap.com from a desktop in order to manage accounts and connect to the inventory API system, but that road block has been removed, allowing for an entirely mobile experience through the Greenery Map app.
App users turn to Greenery Map to help them decide on the strain of Cannabis and product that is right for them depending on their desired mood or medicinal effect. Following the matching, consumers are given a detailed history and description of the strain so that they can make educated purchases, cutting down on time that budtenders need to spend with patrons and speeding up the purchase process. Consumers can then see all of the ways to purchase said product, including the nearby dispensaries that have it in stock, online options, and even delivery options through the app. Greenery Map fully integrates with a dispensary’s inventory API system to update in real-time and give consumers real-time information on dispensary stock for the item they are looking for. The Greenery Map system also provides cannabis businesses in both the B2B and B2C sectors a private database to share and sell information and products. For Cannabis businesses, Greenery Map also offers the opportunity to open bank and merchant accounts through their partnership with PayHouse Consulting Group.
SOURCE Greenery Map
WeBank, IBM and Other Organizations Jointly Held the 1st International Workshop on Federated Machine Learning in conjunction with IJCAI 2019
Once a concept, AI is now ushering in a key stage of application. What’s the solution to the data silos among businesses? Given the enhanced regulation on data at home and abroad, what’s the solution to data privacy and security concerns? What’s the status quo of Federated Machine Learning and how to establish an ecosystem for FML in the future?
WeBank, IBM and other organizations jointly held the 1st International Workshop on Federated Machine Learning for User Privacy and Data Confidentiality (FML’19) in conjunction with the 28th International Joint Conference on Artificial Intelligence (IJCAI-19) on Aug. 12, 2019, to further discussion on these issues.
President of IJCAI, Chair of FML Steering Committee, Chief AI Officer of WeBank Professor Qiang Yang delivered opening remarks at the workshop. Dr. Shahrokh Daijavad from IBM and Dr. Jakub Konečný from Google presented keynote addresses. In the panel discussion, top scholars from WeBank, Bar-Ilan University, IBM, Squirrel AI, Google, Huawei, Clustar, Sinovation Ventures and many other renowned enterprises and universities shared and discussed their findings and experience in FML as an emerging AI technology.
This workshop received 40 papers, of which 12 were presented during the workshop, 19 presented via poster. Awards include Best Theory Paper Award, Best Application Paper Award, Best Student Paper Award, Best Presentation Award. Selected high quality papers will be invited for publication in a special issue in the IEEE Intelligent Systems journal. All these attracted numerous scholars to engage in discussions and join efforts for building the FML ecosystem.
Experts from IBM and Google Share Groundbreaking Findings with a Focus on the Theory and Application of FML
Privacy and security are becoming a key concern in our digital age. On 25th May last year, the implementation of General Data Protection Regulation (GDPR) by the EU, the toughest Act on data privacy protection, stressed that user data collection must be open and transparent. A series of laws and regulations from China and overseas also pose new challenges to the traditional way of handling data and model for cooperation. Seeking ways for AI to adapt to this new reality became top priority, a demand that led to this workshop on FML.
A wealth of solutions and breakthroughs were shared by Dr. Shahrokh Daijavad from IBM and Dr. Jakub Konečný from Google in their speech on FML.
Besides how FML can help tackle challenges in the business world, Dr. Shahrokh Daijavad also shared the concept of Fusion AI, which means to train models on widely distributed data sets, but fuse them to produce one equivalent to what centralized training would yield. “Unlike traditional machine learning, in Fusion AI, model parameters are shared and data is not transferred, which makes Fusion AI model better than models that moving data centrally.” Given the widely distributed data, the development of Fusion AI and FML became ever important and imminent.
“FML enables machine learning engineers and data scientists to work productively with decentralized data with privacy by default,” said Dr. Jakub Konečný from Google. He also shared with us how FML works and its use cases at Google. In the case of Gboard, as on-device data is privacy sensitive or large or is more relevant than server-side proxy data, and labels can be inferred naturally via user interaction, the application of Federated RNN compared to prior n-gram model can increase the accuracy of next-word prediction by 24%, and the click rate of prediction strip by 10%.
Major Figure Panelists Discuss the Way Ahead for FML
The moderator of the panel discussion, AI Principal Scientist of WeBank Dr. Lixin Fan joined panelists including Professor Benny Pinkas from Bar-Ilan University, Dr. Shahrokh Daijavad of IBM Academy of Technology, Chief Architect of Squirrel AI Dr. Richard Tong, Research Scientist of Google Dr. Jakub Konečný, Dr. Baofeng Zhang from CTO Office of CBG Software in Huawei, Executive VP of Clustar Dr. Junxue Zhang, VP of AI Institute in Sinovation Ventures Dr. Ji Feng and other experts in a host of in-depth exchanges with attendees, to shed light on the way ahead for FML.
Experts shared thoughts in the panel discussion on questions including but not limited to: How to meet the security and compliance requirements? Is there a way to extend the value of data while observing user privacy and data security? Given the classic trade-off between data regulation and development of AI, how to achieve the long-term goal of establishing a stable and win-win business ecosystem?
List of Award-Winners
Best Theory Paper Award, Best Application Paper Award, Best Student Paper Award and Best Presentation Award selected by all attendees were announced at the closing of the workshop.
Best Theory Paper Award:
Preserving User Privacy for Machine Learning: Local Differential Privacy or Federated Machine Learning? By Huadi Zheng, Haibo Hu & Ziyang Han;
Best Application Paper Award:
FedHealth: A Federated Transfer Learning Framework for Wearable Healthcare. By Yiqiang Chen, Jindong Wang, Chaohui Yu, Wen Gao & Xin Qin;
Best Student Paper Award:
Quantifying the Performance of Federated Transfer Learning. By Qinghe Jing, Weiyan Wang, Junxue Zhang, Han Tian & Kai Chen;
Best Presentation Award:
Federated Generative Privacy. By Aleksei Triastcyn and Boi Faltings.
President of IJCAI, Chief AI Officer of WeBank Professor Qiang Yang, Chief Architect of Squirrel AI Dr. Richard Tong, andVP of AI Institute in Sinovation Ventures Dr. Ji Feng presented the awards.
“The mission of this International Federated Machine Learning Workshop is to facilitate further understanding in the academia, business community as well as legal and regulatory institutions by promoting the establishment of FML ecosystem in the hope that more businesses will join and build a platform for students aspired to work in FML to find research teams that suit them,” said Professor Qiang Yang.
Held Aug. 10-16, 2019 in Macao, China, IJCAI-19 is one of the leading International Academic Conference on AI, attracting over 3000 AI research personnel and experts. The 1st International Workshop on Federated Machine Learning (FML’19) was a highlight for experts joining this event. Visionaries in the academia and industrial sector expressed the willingness to be part of the effort for academic research, application of FML in the future, and the development and boom of AI ecosystem.
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