Gorman-Rupp Reports First Quarter 2022 Financial Results

Rhea-AI Summary

The Gorman-Rupp Company (NYSE: GRC) reported a 14.8% increase in net sales for Q1 2022, reaching $102.2 million, compared to $89.0 million in Q1 2021. Earnings per share rose to $0.29, up from $0.28, despite an unfavorable LIFO impact. Incoming orders increased 9.6% to $112.0 million, while backlog surged 55.7% to $195.5 million. Operating income was $9.5 million with a margin of 9.3%. SG&A expenses rose by 14%, tied to higher payroll and travel costs. The company projects continued top-line growth, though inflationary pressures on materials persist.

Positive

• Net sales increased 14.8% to $102.2 million.
• Incoming orders grew 9.6% to $112.0 million.
• Backlog increased 55.7% to $195.5 million.
• Earnings per share rose to $0.29.

Negative

• Gross margin decreased from 25.9% to 25.0% due to rising material costs.
• Operating margin fell from 10.1% to 9.3%.

MANSFIELD, Ohio--(BUSINESS WIRE)-- The Gorman-Rupp Company (NYSE: GRC) reports financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights

• First quarter earnings per share were $0.29 compared to $0.28 per share for the first quarter of 2021

- Results included an unfavorable LIFO impact of $0.05 and $0.02 per share in 2022 and 2021, respectively

• Net sales of $102.2 million increased 14.8% compared to the first quarter of 2021
• Incoming orders of $112.0 million increased 9.6% compared to the first quarter of 2021
• Backlog of $195.5 million increased 55.7% compared to the same period in 2021

Net sales for the first quarter of 2022 were $102.2 million compared to net sales of $89.0 million for the first quarter of 2021, an increase of 14.8% or $13.2 million. Domestic sales of $72.4 million increased 15.6% and international sales of $29.8 million increased 12.8% compared to the same period in 2021. Sales have increased across nearly all of our markets and incoming orders for the quarter increased 9.6% compared to the first quarter of 2021 to $112.0 million.

Sales in our water markets increased 11.5% or $7.5 million in the first quarter of 2022 compared to the first quarter of 2021. Sales increased $5.9 million in the fire protection market, $2.3 million in the construction market, and $1.6 million in the repair market. Partially offsetting these increases was a decrease of $2.2 million in the municipal market and $0.1 million in the agriculture market. Incoming orders and backlog for the municipal and agriculture markets were up compared to the prior year period.

Sales in our non-water markets increased 23.3% or $5.7 million in the first quarter of 2022 compared to the first quarter of 2021. Sales increased $3.7 million in the industrial market, $1.7 million in the OEM market, and $0.3 million in the petroleum market.

Gross profit was $25.5 million for the first quarter of 2022, resulting in gross margin of 25.0%, compared to gross profit of $23.0 million and gross margin of 25.9% for the same period in 2021. The 90 basis point decrease in gross margin was driven by a 200 basis point increase in cost of material, which included an unfavorable LIFO impact of 100 basis points, partially offset by a 110 basis point improvement from labor and overhead leverage due to increased sales volume.

Selling, general and administrative (“SG&A”) expenses were $16.0 million and 15.7% of net sales for the first quarter of 2022 compared to $14.1 million and 15.8% of net sales for the same period in 2021. SG&A expenses increased 14.0% or $1.9 million as a result of increased payroll and payroll related costs and increased travel expenses. SG&A expenses as a percentage of sales improved 10 basis points primarily as a result of leverage on fixed costs from increased sales volume.

Operating income was $9.5 million for the first quarter of 2022, resulting in an operating margin of 9.3%, compared to operating income of $9.0 million and operating margin of 10.1% for the same period in 2021. Operating margin decreased 80 basis points primarily as a result of the increased cost of material due to unfavorable LIFO adjustments partially offset by improved leverage on fixed costs from increased sales volume.

Net income was $7.5 million for the first quarter of 2022 compared to $7.4 million in the first quarter of 2021, and earnings per share were $0.29 and $0.28 for the respective periods. Earnings per share included an unfavorable LIFO impact of $0.05 and $0.02 per share for the first quarter of 2022 and 2021, respectively.

The Company’s backlog of orders was $195.5 million at March 31, 2022 compared to $125.5 million at March 31, 2021 and $186.0 million at December 31, 2021. Incoming orders increased 9.6% for the first quarter of 2022 compared to the same period in 2021. Incoming orders were up across most markets the Company serves.

Capital expenditures for first three months of 2022 were $3.5 million and consisted primarily of machinery and equipment. Capital expenditures for the full-year 2022 are presently planned to be in the range of $15-$20 million.

Scott King, President and Chief Executive Officer commented, “We continue to see top line growth across most of our markets and incoming order trends remain positive. Although backlog is still at a historically high level, our aging is consistent. While we have leveraged labor and overhead, inflationary pressures on cost of material persist, so we will continue to adjust our pricing to offset these increases. It appears that global supply chain challenges will extend into the foreseeable future. We are navigating these challenges and believe we will be able to maintain top line growth.”

About The Gorman-Rupp Company

Founded in 1933, The Gorman-Rupp Company is a leading designer, manufacturer and international marketer of pumps and pump systems for use in diverse water, wastewater, construction, dewatering, industrial, petroleum, original equipment, agriculture, fire protection, heating, ventilating and air conditioning (HVAC), military and other liquid-handling applications.

Forward-Looking Statements

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: company specific risk factors including (1) loss of key personnel; (2) intellectual property security; (3) acquisition performance and integration; (4) impairment in the value of intangible assets, including goodwill; (5) defined benefit pension plan settlement expense; and (6) family ownership of common equity; and general risk factors including (7) continuation of the current and projected future business environment, including the duration and scope of the COVID-19 pandemic, the impact of the pandemic and actions taken in response to the pandemic; (8) highly competitive markets; (9) availability and costs of raw materials and labor; (10) cyber security threats; (11) compliance with, and costs related to, a variety of import and export laws and regulations; (12) environmental compliance costs and liabilities; (13) exposure to fluctuations in foreign currency exchange rates; (14) conditions in foreign countries in which The Gorman-Rupp Company conducts business; (15) changes in our tax rates and exposure to additional income tax liabilities; and (16) risks described from time to time in our reports filed with the Securities and Exchange Commission. 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.

The Gorman-Rupp Company
Condensed Consolidated Statements of Income (Unaudited)
(thousands of dollars, except per share data)
					Three Months Ended March 31,
					2022		2021
Net sales					$102,167		$89,027
Cost of products sold					76,670		65,985
Gross profit					25,497		23,042
Selling, general and
administrative expenses					16,039		14,069
Operating income					9,458		8,973
Other income (expense), net					90		345
Income before income taxes					9,548		9,318
Income taxes					2,005		1,889
Net income					$7,543		$7,429
Earnings per share					$0.29		$0.28
The Gorman-Rupp Company
Condensed Consolidated Balance Sheets (Unaudited)
(thousands of dollars, except share data)
					March 31,		December 31,
					2022		2021
Assets
Cash and cash equivalents					$122,686		$125,194
Accounts receivable, net					67,711		58,545
Inventories, net					89,974		85,648
Prepaid and other					8,314		7,795
Total current assets					288,685		277,182
Property, plant and equipment, net					104,238		104,293
Other assets					5,470		6,193
Goodwill and other intangible assets, net					32,925		33,086
Total assets					$431,318		$420,754
Liabilities and shareholders' equity
Accounts payable					$19,934		$17,633
Accrued liabilities and expenses					39,575		34,807
Total current liabilities					59,509		52,440
Pension benefits					9,648		9,342
Postretirement benefits					27,218		27,359
Other long-term liabilities					1,709		1,637
Total liabilities					98,084		90,778
Shareholders' equity					333,234		329,976
Total liabilities and shareholders' equity					$431,318		$420,754
Shares outstanding					26,079,115		26,103,661

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220427005255/en/

Brigette A. Burnell

Corporate Secretary

The Gorman-Rupp Company

Telephone (419) 755-1246

For additional information, contact James C. Kerr, Chief Financial Officer, Telephone (419) 755-1548.

Source: The Gorman-Rupp Company

FAQ

What were Gorman-Rupp's Q1 2022 earnings results?

Gorman-Rupp reported earnings per share of $0.29 for Q1 2022, up from $0.28 in Q1 2021.

How did Gorman-Rupp's net sales perform in Q1 2022?

Net sales for Q1 2022 reached $102.2 million, a 14.8% increase compared to Q1 2021.

What is Gorman-Rupp's outlook for the remainder of 2022?

Gorman-Rupp expects continued top-line growth, although inflationary pressures on material costs may impact margins.

What is the backlog figure for Gorman-Rupp as of March 31, 2022?

The backlog of orders was $195.5 million as of March 31, 2022, a 55.7% increase year-over-year.