Gorman-Rupp Reports Continuing Record Financial Results

30.10.2014

The Gorman-Rupp Company reports financial results for the third quarter and nine months ended September 30, 2014.

Net sales during the third quarter of 2014 increased 8.9% to a record $110.2 million compared to $101.2 million during the same period in 2013. Domestic sales increased 13.5% or $9.3 million while international sales were comparable to the third quarter of 2013. Sales in water end markets increased 9.1% or $6.3 million and sales in non-water end markets increased 8.3% or $2.7 million during the quarter.

The third quarter increase in water end market sales was largely due to additional sales in the municipal market of $7.8 million driven primarily by large volume pumps related to wastewater and flood control. This increase was partially offset by lower agriculture sales of $1.4 million driven by ongoing wet weather conditions in several locations domestically. Increased sales in non-water markets during the third quarter of 2014 were primarily due to added shipments for the industrial market of $5.8 million related to fracking and the contribution from the recent acquisition of Bayou City Pump Company. This increase was offset by lower sales in the OEM market of $3.2 million related to power generation equipment.

Net sales for the nine months ended September 30, 2014 were a record $330.0 million compared to $300.1 million during the same period in 2013, an increase of 10.0%. Domestic sales increased 15.2% or $30.0 million while international sales were comparable to the same period in 2013. Sales increased $20.6 million in water end markets primarily due to additional sales in the municipal market of $17.2 million driven by large volume pumps related to wastewater and water supply. Also, sales in the construction market increased $4.7 million principally for pumps for rental businesses and for oil and gas drilling support within North America. These increases were offset by lower agriculture market sales of $3.4 million driven by wet weather conditions noted previously. Sales increased $9.3 million for the nine months ended September 30, 2014 in non-water markets primarily due to additional shipments of $6.2 million for the industrial market related to fracking and the recent acquisition of Bayou City Pump Company, and $3.6 million in the OEM market.

Gross profit was a record $28.1 million for the third quarter of 2014, resulting in gross margin of 25.5% compared to 24.2% for the same period in 2013. The increase in gross margin was principally due to product mix. Operating income was $14.0 million, resulting in operating margin of 12.7% for the third quarter of 2014 compared to 11.9% for the same period in 2013. The gross margin and operating margin for the third quarter of 2013 were reduced by 30 and 50 basis points, respectively, due to a non-cash pension settlement charge which did not recur in the third quarter of 2014.

Net income was $9.4 million during the third quarter of 2014 compared to $7.9 million in the third quarter of 2013 and earnings per share were $0.36 and $0.30 for the respective periods. Earnings per share for the third quarter of 2013 included a reduction of $0.03 due to a non-cash pension settlement charge which did not recur in the third quarter of 2014.

Gross profit was a record $82.5 million in the first nine months of 2014 resulting in gross margin of 25.0% compared to 24.1% for the same period in 2013. Operating income also was a record $42.1 million resulting in operating margin of 12.8% for the first nine months of 2014 compared to 11.3% for the same period in 2013. The gross margin and operating margin for the first nine months of 2013 were reduced by 70 and 110 basis points, respectively, due to a non-cash pension settlement charge which did not recur in the first nine months of 2014.

Net income for the first nine months of 2014 was a record $28.3 million compared to $22.9 million for the same period in 2013 and earnings per share were $1.08 and $0.87 for the respective periods. Earnings per share for the first nine months of 2013 included a reduction of $0.09 due to a non-cash pension settlement charge which did not recur in the first nine months of 2014.

The Company’s backlog of orders was $170.0 million at September 30, 2014 compared to $182.2 million at December 31, 2013. The $12.2 million decrease in backlog is principally due to record shipments during the third quarter and first nine months of 2014. Approximately $50.1 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 September 30, 2014 backlog total. The remaining backlog for this project is expected to be shipped in the fourth quarter of 2014 and throughout 2015.

Cash and short-term investments totaled $33.2 million and short-term bank debt was $17.2 million at September 30, 2014. Working capital rose $5.8 million from December 31, 2013 to $134.4 million at September 30, 2014. Net capital expenditures for 2014, consisting principally of machinery and equipment and building improvements, are estimated to be in the range of $11 to $13 million and are expected to be financed through internally generated funds.

Jeffrey S. Gorman, President and CEO said, “We are pleased to announce very solid financial results for the third quarter and nine months of the year driven by increased sales in most of our markets and good operating margins. We also are pleased with our Bayou City Pump Company acquisition and its timely integration into our operations. As we move into the fourth quarter we are beginning to look positively at our expectations for 2015. We will continue our focus on providing high quality products, executing on profitable growth and acquisition opportunities, and maintaining a strong balance sheet which provides excellent financial flexibility and supports our following dividend increase announcement.”

At its October 23, 2014 meeting, the Board of Directors of the Company declared a quarterly cash dividend of $0.10 per share on the common stock of the Company, payable December 10, 2014, to shareholders of record November 14, 2014. The cash dividend represents an 11.1% increase over the dividend paid in the previous quarter. This marks the 259th consecutive dividend paid by The Gorman-Rupp Company and the 42nd consecutive year of increased dividends paid to its shareholders.

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