The Gorman-Rupp Company (NYSE MKT: GRC) reports financial
results for the first quarter ended March 31, 2015.
Net sales during the first quarter were $99.2 million compared
to $110.1 million during the record first quarter of 2014. Domestic
sales decreased 9.3% or $6.6 million and international sales
decreased 10.9% or $4.2 million compared to the same period in
2014. Sales in water end markets decreased 11.6% or $9.2 million
and sales in non-water end markets decreased 5.3% or $1.6 million
during the quarter.
The first quarter decrease in water end market sales was largely
due to lower sales in the construction market, including sales to
rental companies, of $4.3 million due primarily to the extremely
rapid decline in oil and gas production which affected both
domestic and international sales. Sales decreased in the
agricultural market $3.0 million primarily due to expected low farm
income during 2015 and wet weather conditions in certain locations
domestically, and sales in the municipal market decreased $1.6
million. These modestly lower municipal market sales were primarily
driven by lower comparative sales of large volume pumps for
wastewater and water supply projects of $9.0 million, offset by
comparative increased shipments related to the Permanent Canal
Closures and Pumps (“PCCP”) project of $7.4 million. Also, sales in
the fire protection market decreased $1.5 million primarily due to
slower domestic commercial building construction. Decreased sales
in the non-water end markets during the first quarter of 2015 were
primarily due to lower sales in the OEM market of $3.6 million
related to power generation equipment. This decrease was partially
offset by increased sales in the petroleum market of $1.4 million
for mid-stream transmission of refined petrochemical products and
the contribution from the mid-2014 acquisition of Bayou City Pump
Company.
Due to the referenced decline in oil and natural gas production,
combined with adverse winter conditions, net sales in January and
February were particularly slower than the final month of the first
quarter. Of the total decrease in net sales in the first quarter of
2015 of $10.8 million, $2.2 million or 20.4% of the decrease was
due to negative currency translation.
Gross profit was $23.9 million for the first quarter of 2015,
resulting in gross margin of 24.1% compared to 25.0% for the same
period in 2014. Operating income was $10.6 million, resulting in
operating margin of 10.7% for the first quarter of 2015 compared to
13.3% for the same period in 2014. Net income was $7.3 million
during the first quarter of 2015 compared to $10.0 million in the
first quarter of 2014 and earnings per share were $0.28 and $0.38
for the respective periods. Currency translation negatively
impacted current earnings per share by $0.01 per share. The gross
profit and operating income margin declines were due principally to
the sales volume decreases from 2014 to 2015 and were not otherwise
significantly impacted by any unusual cost increases other than
increased health care expenses of 59 and 76 basis points,
respectively.
The Company’s backlog of orders was $158.9 million at March 31,
2015 compared to $171.7 million a year ago and $160.7 million at
December 31, 2014. The decrease in backlog from a year ago is due
principally to record shipments during 2014 including approximately
$22.0 million related to the PCCP project during the last four
quarters. Approximately $39.1 million of orders related to the PCCP
project remain in the March 31, 2015 backlog total. The PCCP
project contract was increased for several contract additions
totaling $4.7 million during the quarter. Approximately $32.9
million of the total remaining PCCP project are scheduled to ship
during 2015 and $6.2 million during the first two quarters of 2016.
Encouragingly, incoming orders during the first quarter of 2015
were comparable to the same period last year and increased $2.2
million compared to the fourth quarter of 2014 due principally to
the beginning of the normal agricultural season, large volume pumps
for wastewater and change orders for the PCCP project.
Cash and cash equivalents totaled $27.3 million and short-term
bank debt was $9.0 million at March 31, 2015, having been reduced
by $3.0 million since December 31, 2014. Working capital rose $5.1
million from December 31, 2014 to a record $141.5 million at March
31, 2015. Net capital expenditures for 2015, consisting primarily
of machinery and equipment, a new operations facility in Ireland
and other building improvements, are currently estimated to be in
the range of $13 to $15 million and are expected to be financed
through internally-generated funds.
The Company is very proud to have been recognized for the fourth
consecutive year as one of the 100 Most Trustworthy Companies in
America by Forbes. To create this list, the year’s public filings
for more than 5,500 U.S. publicly-traded companies were reviewed
and evaluated in depth to identify the 100 that most “consistently
demonstrated transparent accounting practices and solid corporate
governance.”
Jeffrey S. Gorman, President and CEO commented, “Multiple
headwinds affected our first quarter results, including our
comparisons to 2014’s historical record sales and operating
results. The economic impacts of the rapid decline in prices and
related production of oil directly affected our construction,
rental and industrial pumps markets, and indirectly impacted our
other markets. Additionally, the strong U.S. dollar worked against
export and international sales, and lower commodity prices combined
with wet weather conditions in many parts of the country negatively
impacted irrigation supply pump sales. On the brighter side we do
feel that fire protection and municipal pump sales will continue to
improve gradually and our portion of the New Orleans PCCP flood
control project will remain on schedule. Although the headwinds may
well continue for some time, we will remain focused on our
long-term track of solid domestic and international organic growth
combined with strategic acquisition opportunities.”
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, changes in
foreign exchange rates, commodity pricing and capital and consumer
spending and volatility in domestic oil production activity; (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 PCCP project, including any further revisions
to the timing of shipments for the project; (8) continuation of the
favorable environment to make acquisitions, domestic and foreign,
including regulatory requirements and market values of potential
candidates and our ability to successfully integrate and realize
the anticipated benefits of completed acquisitions; and (9) 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.
Brigette A. BurnellCorporate SecretaryThe Gorman-Rupp
CompanyTelephone (419) 755-1246NYSE MKT: GRC
The Gorman-Rupp Company and Subsidiaries Condensed
Consolidated Statements of Income (Unaudited) (in thousands of
dollars, except per share data)
Three Months Ended March 31, 2015 2014 Net sales $
99,233 $ 110,064 Cost of products sold 75,318 82,510
Gross profit 23,915 27,554
Selling, general and administrative
expenses
13,312 12,861 Operating income 10,603 14,693
Other income (expense) - net 310 139
Income before income taxes 10,913 14,832 Income taxes 3,638
4,878 Net income $ 7,275 $ 9,954 Earnings per
share $ 0.28 $ 0.38 The Gorman-Rupp Company and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) (in thousands of
dollars) March 31, December 31,
2015 2014
Assets
Cash and cash equivalents $ 27,301 $ 24,491 Accounts receivable -
net 71,593 70,734 Inventories 97,202 94,760 Deferred income taxes
and other current assets 9,111 10,724 Total
current assets 205,207 200,709 Property, plant and equipment
- net 132,007 133,964 Deferred income taxes and other 6,152
6,313 Goodwill and other intangible assets 39,448
39,918 Total assets $ 382,814 $ 380,904
Liabilities and
shareholders' equity
Accounts payable $ 20,361 $ 17,908 Short-term debt 9,000 12,000
Accrued liabilities and expenses 34,376 34,438
Total current liabilities 63,737 64,346 Pension benefits
4,871 4,496 Postretirement benefits 21,414 21,297
Deferred and other income taxes 8,786 8,798
Total liabilities 98,808 98,937 Shareholders' equity
284,006 281,967 Total liabilities and shareholders'
equity $ 382,814 $ 380,904 Shares outstanding 26,260,543
26,260,543
The Gorman-Rupp CompanyWayne L. Knabel, 419-755-1397Chief
Financial Officer
Gorman Rupp (NYSE:GRC)
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