The Gorman-Rupp Company reports financial results for the fourth quarter and year ended December 31, 2014.
Net sales during the fourth quarter of 2014 increased 14.6% to a record $105.0 million compared to $91.6 million during the same period in 2013. Domestic sales increased 18.9% or $11.2 million and international sales increased 6.7% or $2.2 million compared to the fourth quarter of 2013. Sales in water end markets increased 13.7% or $8.9 million and sales in non-water end markets increased 16.9% or $4.5 million during the quarter.
Source: Gorman Rupp
The fourth quarter increase in water end market sales was largely due to additional sales in the fire protection market of $4.2 million driven primarily by international sales and additional sales in the construction market of $1.4 million principally for pumps for rental businesses. Also, sales increased $2.9 million in the municipal market primarily due to large volume pumps related to flood control, partially offset by decreased sales for smaller infrastructure projects. Increased sales in non-water markets during the fourth quarter of 2014 were primarily due to added shipments for the industrial market of $5.1 million related to fracking and the contribution from the recent acquisition of Bayou City Pump Company.
Net sales for the year ended December 31, 2014 were a record $434.9 million compared to $391.7 million for the year 2013, an increase of 11.0%. Domestic sales increased 16.1% or $41.3 million while international sales were up 3.2% on a constant currency basis but were largely offset by currency translation of $2.4 million. Sales increased 10.4% or $28.6 million in water end markets primarily due to additional sales in the municipal market of $20.0 million driven by large volume pumps related to wastewater and flood control. Also, sales increased in the construction market by $6.1 million principally for pumps for rental businesses and for oil and gas drilling support within North America, and in the fire protection market by $3.8 million driven primarily by domestic sales. These increases were largely offset by lower agriculture market sales of $4.3 million driven by wet weather conditions in several domestic regions. Sales increased 12.5% or $14.7 million for the year ended December 31, 2014 in non-water markets primarily due to additional shipments of $13.3 million for the industrial market related to fracking and $8.5 million from the recent acquisition of Bayou City Pump Company.
Gross profit was $25.0 million for the fourth quarter of 2014, resulting in gross margin of 23.8% compared to 23.4% for the same period in 2013. Operating income was $11.2 million, resulting in operating margin of 10.6% for the fourth quarter of 2014 compared to 8.9% for the same period in 2013. The gross margin and operating margin for the fourth quarter of 2013 were reduced by 50 and 70 basis points, respectively, due to a non-cash pension settlement charge which did not recur in the fourth quarter of 2014.
Net income was $7.9 million during the fourth quarter of 2014 compared to $7.2 million in the fourth quarter of 2013 and earnings per share were $0.30 and $0.28 for the respective periods. The fourth quarter of 2013 included a non-recurring asset sale gain of $0.06 per share offset by $0.01 per share due to a non-cash pension settlement charge, both of which did not recur in the fourth quarter of 2014.
Gross profit was a record $107.6 million in 2014 resulting in gross margin of 24.7% compared to 23.9% for 2013. Operating income also was a record $53.3 million resulting in operating margin of 12.3% for 2014 compared to 10.7% in 2013. The gross margin and operating margin for 2013 were reduced by 70 and 110 basis points, respectively, due to a non-cash pension settlement charge which did not recur in 2014.
Net income for 2014 was a record $36.1 million compared to $30.1 million for 2013 and earnings per share were $1.38 and $1.15 for the respective years. Earnings per share for 2013 included a reduction of $0.10 due to a non-cash pension settlement charge offset by $0.06 per share for a non-recurring asset sale gain, both of which did not recur in 2014. Currency translation negatively impacted earnings in 2014 by $0.01 per share.
The Company’s backlog of orders was $160.7 million at December 31, 2014 compared to $182.2 million a year ago and $170.0 million at September 30, 2014. The decrease in backlog from a year ago is principally due to record shipments during 2014, including approximately $14.4 million related to the Permanent Canal Closure Project (“PCCP”) to supply major flood control pumps to a member of a joint venture construction group for a significant New Orleans flood control project. Excluding the PCCP project, incoming orders increased 12.3% in 2014 compared to 2013. Approximately $43.2 million of the PCCP project remain in the December 31, 2014 backlog total and are expected to be shipped by the end of 2015.
Cash and cash equivalents totaled $24.7 million and short-term bank debt was $12.0 million at December 31, 2014. The Company generated $68.5 million in earnings before interest, taxes, depreciation and amortization during 2014 and invested $14.1 million in buildings and machinery and equipment. Capital additions in 2015 are expected to be $18-$20 million. Working capital rose $6.6 million from December 31, 2013 to $135.1 million at December 31, 2014.
Jeffrey S. Gorman, President and CEO said, “Our fourth quarter results were strong and contributed significantly to another record year of revenue and earnings for the Company accomplished through increased sales in all markets except agriculture. Our notable increases were in municipal projects, construction including rental sales, and fire pump systems. Operationally we continued to perform well during our growth demonstrated by solid gross and operating margins.
“We are pleased with Patterson Pump Company’s performance on the PCCP project for which shipments of the large flood control pumps began this year and will be an even larger contributor in 2015. Also, 2015 results will include a complete year of our Bayou City Pump Company acquisition which adds market diversity for our petroleum handling products and services.
“We have not seen any major order cancellations, but the recent dramatic decline in the price of oil may have a negative impact in the near term on some of the markets we serve such as construction, including rental equipment, and fire protection. Also, there may be additional headwinds for 2015 due to continuing unfavorable exchange rate alignments compounded by ongoing international economic uncertainties.
“Although more cautious than a few months ago, we continue to believe we are well positioned for the year ahead based on our strong and flexible balance sheet, quality products and the diversity and depth of our markets.”