Gorman-Rupp Reports Second Quarter Financial Results

MANSFIELD, Ohio--()--The Gorman-Rupp Company (NYSE MKT: GRC) reports financial results for the second quarter ended June 30, 2014.

Net sales during the second quarter of 2014 increased 3.1% to $109.7 million compared to $106.4 million during the same period in 2013. Domestic sales increased 11.9% or $8.3 million while international sales decreased 13.5% or $5.0 million. Sales in water end markets increased 1.1% or $0.7 million and sales in non-water end markets increased 5.7% or $1.8 million during the second quarter.

The second quarter increase in water end market sales was largely due to increased sales in the municipal market of $5.1 million driven by large volume pumps related to wastewater and flood control. This increase was partially offset by lower fire protection sales of $3.2 million due to timing of shipments and lower agriculture sales driven by wet weather conditions. Sales increased $1.8 million in non-water markets primarily due to increased shipments for the OEM market related to power generation equipment and pumps for residential appliances.

Net sales for the six months ended June 30, 2014 were a record $219.8 million compared to $198.9 million during the same period in 2013, an increase of 10.5%. Domestic sales increased 16.0% or $20.7 million while international sales were comparable to the same period in 2013. Sales increased $12.7 million in water end markets primarily due to higher sales in the municipal market of $9.4 million driven by large volume pumps related to wastewater, water supply and flood control. In addition, sales in the construction market increased $4.6 million principally for pumps for rental businesses and for oil and gas drilling and fracking within North America. These increases were reduced by lower agriculture sales of $2.1 million in large part driven by wet weather conditions. Sales increased $6.6 million in non-water markets primarily due to increased shipments for the OEM market related to power generation equipment and pumps for military applications and residential appliances.

Gross profit was $26.9 million for the second quarter of 2014, resulting in gross margin of 24.5% compared to 24.9% in the same period in 2013. The decrease in gross margin was principally due to increased cost of material primarily from the purchase of completed components for our previously disclosed Permanent Canal Closure and Pumps (“PCCP”) project driven by timing and capacity constraints, and freight costs due mostly to PCCP flood control project specialized shipments. These costs and some additional temporary labor totaled 160 basis points. Operating income was $13.4 million, resulting in operating margin of 12.2% in the second quarter of 2014 compared to 12.7% in the same period in 2013. The gross margin and operating margin for the second quarter of 2013 were reduced by 100 and 150 basis points, respectively, due to a non-cash pension settlement charge which did not recur in the second quarter of 2014.

Net income was $8.9 million during the second quarter of 2014 compared to $9.2 million in the second quarter of 2013 and earnings per share were $0.34 and $0.35 for the respective periods. Earnings per share for the second quarter of 2013 included a reduction of $0.04 due to a non-cash pension settlement charge which did not recur in the second quarter of 2014.

Gross profit was a record $54.5 million in the first six months of 2014 resulting in gross margin of 24.8% compared to 24.0% in 2013. Operating income also was a record $28.1 million resulting in operating margin of 12.8% in the first six months of 2014 compared to 10.9% in 2013. The gross margin and operating margin for the first six months of 2013 were reduced by 100 and 160 basis points, respectively, due to a non-cash pension settlement charge which did not recur in the second quarter of 2014.

Net income for the first six months of 2014 was a record $18.8 million compared to $15.0 million in 2013 and earnings per share were $0.72 and $0.57 for the respective periods. Earnings per share for the first six months of 2013 included a reduction of $0.07 due to a non-cash pension settlement charge which did not recur in the first six months of 2014.

The Company’s backlog of orders was $173.8 million at June 30, 2014 compared to $182.2 million at December 31, 2013. Incoming orders grew 12.6% during the current quarter compared to the previous quarter reflecting increased activity across both our water and non-water end markets. The $8.4 million decrease in backlog is principally due to record shipments during the first six months of 2014. Approximately $53.5 million of the PCCP project to supply major flood control pumps to a member of a joint venture construction group for a significant New Orleans flood control project remain in the June 30, 2014 backlog total. The pumps for this project are expected to be shipped primarily in the second half of 2014 and first half of 2015.

Cash and short-term investments totaled $29.7 million and short-term bank debt was $22.7 million at June 30, 2014. During the second quarter of 2014, $18.0 million was borrowed to fund the acquisition of the assets of Bayou City Pump Company. Working capital rose $0.7 million from December 31, 2013 to $129.2 million at June 30, 2014. Net capital expenditures for 2014, consisting principally of machinery and equipment and building improvements, are estimated to be in the range of $12 to $14 million and are expected to be financed through internally generated funds.

Jeffrey S. Gorman, President and CEO said, “We are pleased with the Company’s performance during the first six months of the year and remain encouraged by the incoming order activity we are seeing across most of the key markets we serve. This activity continued to increase this quarter and helped us achieve a strong start in 2014 with record first half year revenue and earnings. We also are pleased about the recent acquisition of Bayou City Pump Company and the new niche market opportunities it should provide.”

Safe Harbor Statement

In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, The Gorman-Rupp Company provides the following cautionary statement: This news release contains various forward-looking statements based on assumptions concerning The Gorman-Rupp Company's operations, future results and prospects. These forward-looking statements are based on current expectations about important economic, political, and technological factors, among others, and are subject to risks and uncertainties, which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Such factors include, but are not limited to: (1) continuation of the current and projected future business environment, including interest rates and capital and consumer spending; (2) competitive factors and competitor responses to initiatives of The Gorman-Rupp Company; (3) successful development and market introductions of anticipated new products; (4) stability of government laws and regulations, including taxes; (5) stable governments and business conditions in emerging economies; (6) successful penetration of emerging economies; (7) unforeseen delays or disruptions in the New Orleans flood control project; and (8) continuation of the favorable environment to make acquisitions, domestic and foreign, including regulatory requirements and market values of candidates and our ability to successfully integrate and realize the anticipated benefits of completed acquisitions. Except to the extent required by law, we do not undertake and specifically decline any obligation to review or update any forward-looking statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments or otherwise.

Brigette A. Burnell
Corporate Secretary
The Gorman-Rupp Company
Telephone (419) 755-1246
NYSE MKT: GRC

For additional information, contact Wayne L. Knabel, Chief Financial Officer, Telephone (419) 755-1397.

         
The Gorman-Rupp Company and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(in thousands of dollars, except per share data)
       
Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
 
Net sales $109,728 $106,415 $219,792 $198,872
Cost of products sold 82,824   79,934   165,334   151,167  
 
Gross profit 26,904 26,481 54,458 47,705
 
Selling, general and
administrative expenses 13,483   12,964   26,344   25,931  
 
Operating income 13,421 13,517 28,114 21,774
 
Other income (expense) - net (193 ) (21 ) (54 ) (51 )
 
Income before income taxes 13,228 13,496 28,060 21,723
Income taxes 4,368   4,328   9,246   6,737  
 
Net income $8,860   $9,168   $18,814   $14,986  
 
Earnings per share $0.34 $0.35 $0.72 $0.57
 
 
The Gorman-Rupp Company and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands of dollars)
 
June 30, December 31,
2014 2013

Assets

Cash and cash equivalents $29,701 $31,376
Accounts receivable - net 75,864 59,374
Inventories 88,376 89,946
Deferred income taxes and other current assets 11,317   8,593  
 
Total current assets 205,258 189,289
 
Property, plant and equipment - net 132,810 131,189
 
Other assets 6,396 3,657
 
Goodwill and other intangible assets 41,170   31,503  
 
Total assets $385,634   $355,638  
 

Liabilities and shareholders' equity

Accounts payable $20,252 $17,882
Short-term debt 22,667 9,000
Accrued liabilities and expenses 33,105   33,878  
 
Total current liabilities 76,024 60,760
 
Postretirement benefits 18,988 18,393
 
Deferred and other income taxes 12,331   12,345  
 
Total liabilities 107,343 91,498
 
Shareholders' equity 278,291   264,140  
 
Total liabilities and shareholders' equity $385,634   $355,638  
 
Shares outstanding 26,253,043 26,253,043

Contacts

The Gorman-Rupp Company
Wayne L. Knabel, Chief Financial Officer, 419-755-1397

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Contacts

The Gorman-Rupp Company
Wayne L. Knabel, Chief Financial Officer, 419-755-1397