Gorman-Rupp Reports First Quarter 2024 Financial Results
- Record incoming orders of $178.9 million, a 7.1% increase from the first quarter of 2023
- First quarter net income of $7.9 million, a $1.4 million increase from the first quarter of 2023
- Gross margin increased by 200 basis points compared to the first quarter of 2023
- Domestic sales increased in the municipal, construction, petroleum, and industrial markets
- Operating income was $20.4 million, a 90 basis point increase from the same period in 2023
- Backlog of orders stood at $234.2 million at March 31, 2024, showing growth from the previous year
- Capital expenditures for 2024 are estimated to be in the range of $18 - $20 million
- None.
Insights
First Quarter 2024 Highlights
-
Net sales of
$159.3 million 0.7% , or$1.2 million -
Record incoming orders of
$178.9 million 7.1% , or$11.9 million 27.0% , or$38.1 million -
First quarter net income was
$7.9 million $0.30 $6.5 million $0.25 -
Adjusted earnings per share1 for the first quarters of 2024 and 2023 were
$0.30 $0.27
-
Adjusted earnings per share1 for the first quarters of 2024 and 2023 were
- Gross margin increased 200 basis points compared to the first quarter of 2023
-
Adjusted EBITDA1 of
$28.2 million $0.2 million 0.6% , from$28.4 million
Net sales for the first quarter of 2024 were
Sales increased
Gross profit was
Selling, general and administrative (“SG&A”) expenses were
Amortization expense was
Operating income was
Interest expense was
Net income was
Adjusted EBITDA1 was
The Company’s backlog of orders was
Net cash provided by operating activities for the first three months of 2024 was
Scott A. King, President and CEO commented, “We continued to deliver gross margin and earnings improvement despite sales being down slightly to last year. We had record incoming orders during the quarter, in part due to our municipal market, which includes flood control and storm water management applications. As a result, we saw an increase in backlog of
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 suppression, heating, ventilating and air conditioning (HVAC), military and other liquid-handling applications.
(1) Non-GAAP Information
This release includes certain non-GAAP financial data and measures such as adjusted earnings, adjusted earnings per share, and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Adjusted earnings is earnings excluding amortization of customer backlog. Adjusted earnings per share is earnings per share excluding amortization of customer backlog per share. Adjusted earnings before interest, taxes, depreciation and amortization is net income (loss) excluding interest, taxes, depreciation and amortization, adjusted to exclude amortization of customer backlog, and non-cash LIFO2 expense. Management utilizes these adjusted financial data and measures to assess comparative operations against those of prior periods without the distortion of non-comparable factors. The inclusion of these adjusted measures should not be construed as an indication that the Company’s future results will be unaffected by unusual or infrequent items or that the items for which the Company has made adjustments are unusual or infrequent or will not recur. Further, the impact of the LIFO2 inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO2 and depending upon which method they may elect. The Gorman-Rupp Company believes that these non-GAAP financial data and measures also will be useful to investors in assessing the strength of the Company’s underlying operations and liquidity from period to period. These non-GAAP financial measures are not intended to replace GAAP financial measures, and they are not necessarily standardized or comparable to similarly titled measures used by other companies. Provided later in this release is a reconciliation of adjusted earnings, adjusted earnings per share, and adjusted EBITDA to their respective corresponding GAAP financial measures, which includes descriptions of actual adjustments made in the current period and the corresponding prior period.
(2) LIFO Inventory Method
The majority of the Company’s inventories are valued on the last-in, first-out (LIFO) method and stated at the lower of cost or market. Current cost approximates replacement cost, or market, and LIFO cost is determined at the end of each fiscal year based on inventory levels on-hand at current replacement cost and a LIFO reserve. The Company uses the simplified LIFO method, under which the LIFO reserve is determined utilizing the inflation factor specified in the Producer Price Index for Machinery and Equipment – Pumps, Compressors and Equipment, as published by the
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 uncertainties include, but are not limited to, our estimates of future earnings and cash flows, general economic conditions and supply chain conditions and any related impact on costs and availability of materials, integration of the Fill-Rite business in a timely and cost effective manner, retention of supplier and customer relationships and key employees, the ability to achieve synergies and cost savings in the amounts and within the time frames currently anticipated and the ability to service and repay indebtedness incurred in connection with the transaction. Other 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) the Company’s indebtedness and how it may impact the Company’s financial condition and the way it operates its business; (5) general risks associated with acquisitions; (6) the anticipated benefits from the Fill-Rite transaction may not be realized; (7) impairment in the value of intangible assets, including goodwill; (8) defined benefit pension plan settlement expense; (9) risk of reserve and expense increases resulting from the LIFO2 inventory method; and (10) family ownership of common equity; and general risk factors including (11) continuation of the current and projected future business environment; (12) highly competitive markets; (13) availability and costs of raw materials and labor; (14) cybersecurity threats; (15) compliance with, and costs related to, a variety of import and export laws and regulations; (16) environmental compliance costs and liabilities; (17) exposure to fluctuations in foreign currency exchange rates; (18) conditions in foreign countries in which The Gorman-Rupp Company conducts business; (19) changes in our tax rates and exposure to additional income tax liabilities; and (20) 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, |
||||||||
|
2024 |
|
|
|
2023 |
|
||
| Net sales | $ |
159,268 |
|
$ |
160,466 |
|
||
| Cost of products sold |
|
110,874 |
|
|
114,943 |
|
||
| Gross profit |
|
48,394 |
|
|
45,523 |
|
||
| Selling, general and administrative expenses |
|
24,888 |
|
|
23,237 |
|
||
| Amortization expense |
|
3,077 |
|
|
3,191 |
|
||
| Operating income |
|
20,429 |
|
|
19,095 |
|
||
| Interest expense |
|
(10,073 |
) |
|
(10,187 |
) |
||
| Other expense, net |
|
(272 |
) |
|
(433 |
) |
||
| Income before income taxes |
|
10,084 |
|
|
8,475 |
|
||
| Provision for income taxes |
|
2,200 |
|
|
1,955 |
|
||
| Net income | $ |
7,884 |
|
$ |
6,520 |
|
||
| Earnings per share | $ |
0.30 |
|
$ |
0.25 |
|
||
The Gorman-Rupp Company |
||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
| (thousands of dollars, except share data) | ||||||||
March 31, |
|
December 31, |
||||||
| Assets |
|
2024 |
|
|
|
2023 |
|
|
| Cash and cash equivalents | $ |
27,772 |
$ |
30,518 |
||||
| Accounts receivable, net |
|
94,757 |
|
|
89,625 |
|
||
| Inventories, net |
|
101,053 |
|
|
104,156 |
|
||
| Prepaid and other |
|
12,623 |
|
|
11,812 |
|
||
| Total current assets |
|
236,205 |
|
|
236,111 |
|
||
| Property, plant and equipment, net |
|
134,861 |
|
|
134,872 |
|
||
| Other assets |
|
24,923 |
|
|
24,841 |
|
||
| Goodwill and other intangible assets, net |
|
491,372 |
|
|
494,534 |
|
||
| Total assets | $ |
887,361 |
|
$ |
890,358 |
|
||
| Liabilities and shareholders' equity | ||||||||
| Accounts payable | $ |
27,743 |
|
$ |
23,277 |
|
||
| Current portion of long-term debt |
|
24,063 |
|
|
21,875 |
|
||
| Accrued liabilities and expenses |
|
49,899 |
|
|
55,524 |
|
||
| Total current liabilities |
|
101,705 |
|
|
100,676 |
|
||
| Pension benefits |
|
11,601 |
|
|
11,500 |
|
||
| Postretirement benefits |
|
22,738 |
|
|
22,786 |
|
||
| Long-term debt, net of current portion |
|
376,666 |
|
|
382,579 |
|
||
| Other long-term liabilities |
|
20,968 |
|
|
23,358 |
|
||
| Total liabilities |
|
533,678 |
|
|
540,899 |
|
||
| Shareholders' equity |
|
353,683 |
|
|
349,459 |
|
||
| Total liabilities and shareholders' equity | $ |
887,361 |
|
$ |
890,358 |
|
||
| Shares outstanding |
|
26,210,986 |
|
|
26,193,998 |
|
||
The Gorman-Rupp Company |
||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| (thousands of dollars, except share data) | ||||||||
Three Months Ended March 31, |
||||||||
|
2024 |
|
|
|
2023 |
|
||
| Cash flows from operating activities: | ||||||||
| Net income | $ |
7,884 |
|
$ |
6,520 |
|
||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization |
|
7,065 |
|
|
7,044 |
|
||
| LIFO expense |
|
993 |
|
|
2,032 |
|
||
| Pension expense |
|
663 |
|
|
808 |
|
||
| Stock based compensation |
|
1,074 |
|
|
465 |
|
||
| Amortization of debt issuance fees |
|
767 |
|
|
740 |
|
||
| Other |
|
97 |
|
|
14 |
|
||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net |
|
(5,425 |
) |
|
(4,264 |
) |
||
| Inventories, net |
|
1,462 |
|
|
(7,533 |
) |
||
| Accounts payable |
|
4,624 |
|
|
7,236 |
|
||
| Commissions payable |
|
(1,826 |
) |
|
961 |
|
||
| Deferred revenue and customer deposits |
|
(169 |
) |
|
859 |
|
||
| Income taxes |
|
2,406 |
|
|
1,534 |
|
||
| Accrued expenses and other |
|
(4,120 |
) |
|
2,909 |
|
||
| Benefit obligations |
|
(4,753 |
) |
|
(703 |
) |
||
| Net cash provided by operating activities |
|
10,742 |
|
|
18,622 |
|
||
| Cash flows from investing activities: | ||||||||
| Capital additions |
|
(3,906 |
) |
|
(6,450 |
) |
||
| Other |
|
52 |
|
|
426 |
|
||
| Net cash used for investing activities |
|
(3,854 |
) |
|
(6,024 |
) |
||
| Cash flows from financing activities: | ||||||||
| Cash dividends |
|
(4,715 |
) |
|
(4,567 |
) |
||
| Treasury share repurchases |
|
(267 |
) |
|
(1,028 |
) |
||
| Proceeds from bank borrowings |
|
- |
|
|
5,000 |
|
||
| Payments to banks for borrowings |
|
(4,375 |
) |
|
(6,375 |
) |
||
| Other |
|
(17 |
) |
|
(34 |
) |
||
| Net cash used for financing activities |
|
(9,374 |
) |
|
(7,004 |
) |
||
| Effect of exchange rate changes on cash |
|
(260 |
) |
|
(146 |
) |
||
| Net increase (decrease) in cash and cash equivalents |
|
(2,746 |
) |
|
5,448 |
|
||
| Cash and cash equivalents: | ||||||||
| Beginning of period |
|
30,518 |
|
|
6,783 |
|
||
| End of period | $ |
27,772 |
|
$ |
12,231 |
|
||
The Gorman-Rupp Company |
||||||||
| Non-GAAP Financial Information | ||||||||
| (thousands of dollars, except per share data) | ||||||||
Three Months Ended March 31, |
||||||||
|
2024 |
|
|
|
2023 |
|
||
| Adjusted earnings: | ||||||||
| Reported net income – GAAP basis | $ |
7,884 |
$ |
6,520 |
||||
| Amortization of acquired customer backlog |
|
- |
|
|
514 |
|
||
| Non-GAAP adjusted earnings | $ |
7,884 |
|
$ |
7,034 |
|
||
Three Months Ended March 31, |
||||||||
|
2024 |
|
|
|
2023 |
|
||
| Adjusted earnings per share: | ||||||||
| Reported earnings per share – GAAP basis | $ |
0.30 |
|
$ |
0.25 |
|
||
| Amortization of acquired customer backlog |
|
- |
|
|
0.02 |
|
||
| Non-GAAP adjusted earnings per share | $ |
0.30 |
|
$ |
0.27 |
|
||
Three Months Ended March 31, |
||||||||
|
2024 |
|
|
|
2023 |
|
||
| Adjusted earnings before interest, taxes, depreciation and amortization: | ||||||||
| Reported net income – GAAP basis | $ |
7,884 |
|
$ |
6,520 |
|
||
| Interest expense |
|
10,073 |
|
|
10,187 |
|
||
| Provision for income taxes |
|
2,200 |
|
|
1,955 |
|
||
| Depreciation and amortization |
|
7,065 |
|
|
7,044 |
|
||
| Non-GAAP earnings before interest, | ||||||||
| taxes, depreciation and amortization |
|
27,222 |
|
|
25,706 |
|
||
| Amortization of acquired customer backlog |
|
- |
|
|
650 |
|
||
| Non-cash LIFO expense |
|
993 |
|
|
2,032 |
|
||
| Non-GAAP adjusted earnings before interest, | ||||||||
| taxes, depreciation and amortization | $ |
28,215 |
|
$ |
28,388 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240424557957/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 the net sales for Gorman-Rupp in the first quarter of 2024?
How did Gorman-Rupp's net income perform in the first quarter of 2024 compared to 2023?
What was the gross margin increase for Gorman-Rupp in the first quarter of 2024?
What was the backlog of orders for Gorman-Rupp at the end of the first quarter of 2024?
What are Gorman-Rupp's projected capital expenditures for 2024?
