The Gorman-Rupp Company (NYSE MKT: GRC) reports financial
results for the third quarter and nine months ended September 30,
2015.
Net sales during the third quarter were $104.2 million compared
to a record $110.2 million during the third quarter of 2014.
Domestic sales decreased 7.9% or $6.2 million while international
sales were comparable between periods as they increased $237,000.
Sales in the water end markets decreased 2.9% or $2.2 million and
sales in non-water end markets decreased 10.8% or $3.8 million
during the quarter. Of the total $5.9 million decrease in net sales
in the third quarter, $1.7 million or 28.8% of the decrease was due
to unfavorable foreign currency translation.
The third quarter activity in water end market sales included
$5.3 million of increased sales in the fire protection market due
to higher international and domestic sales of $3.2 million and $2.1
million, respectively. Despite increased shipments of $6.4 million
related to the Permanent Canal Closures and Pumps (“PCCP”) project
in New Orleans, sales in the municipal market decreased $3.9
million overall driven primarily by reduced demand for large volume
pumps for wastewater and flood control projects. Also, sales in the
construction market decreased $3.5 million due primarily to the
decline in drilling of oil and gas in North America. Decreased
sales in the non-water end markets during the third quarter of 2015
were primarily due to $2.3 million of lower sales in the industrial
market also largely due to the downturn in oil and gas. In
addition, sales in the OEM market decreased $1.1 million primarily
due to lower sales of pumps for military applications.
Net sales for the nine months ended September 30, 2015 were
$307.4 million compared to a record $330.0 million during the same
period in 2014, a decrease of 6.8%. Domestic sales decreased 9.3%
or $21.2 million and international sales decreased 1.3% or $1.4
million. Of the total decrease in net sales during the nine month
period ended September 30, 2015, $6.0 million or 26.7% was due to
unfavorable currency translation. Sales in water end markets
decreased 4.6% or $10.7 million. Activity in the water end markets
included $12.0 million of increased sales in the fire protection
market principally due to higher international sales. This increase
was offset by $11.6 million of lower sales in the construction
market due primarily to the global decline in new oil and gas
drilling which affected both domestic and international sales.
Despite increased shipments of $22.9 million related to the PCCP
project, sales in the municipal market decreased $7.7 million
overall driven by reduced demand for large volume pumps for
wastewater and water supply projects. Also, sales decreased $5.1
million in the agricultural market primarily due to unseasonably
wet weather conditions in most locations domestically and lower
commodity prices. Sales decreased 11.9% or $11.9 million in
non-water markets primarily due to lower sales in the OEM market
related to power generation equipment and pumps for military
applications and residential appliances.
Due to recent increased retirements and a related surge in lump
sum pension payments, the Company recorded a U.S. GAAP-required
$1.9 million non-cash pension settlement charge during the third
quarter of 2015 relating to its defined benefit pension plan. The
Company recorded a total of $3.3 million in non-cash pension
settlement charges during the first nine months of 2015. We expect
that a similar non-cash charge of approximately $1.0 million will
occur during the fourth quarter of this year as additional expected
retirements and related lump sum payments are made. The rate of
retirements was less in 2014 and in the first quarter of 2015 and
settlement charges were not required in those periods.
Gross profit was $23.3 million for the third quarter of 2015,
resulting in gross margin of 22.4% compared to 25.5% for the same
period in 2014. Operating income was $8.9 million, resulting in
operating margin of 8.6% for the third quarter of 2015 compared to
12.7% for the same period in 2014. The quarter’s gross profit and
operating income margin declines were due principally to the sales
volume decreases from 2014 to 2015, sales mix changes due to
increased shipments and percentages of shipments of lower margin
engine and motor equipped systems, and the non-cash pension
settlement charge described above of 120 and 180 basis points,
respectively. Net income was $5.9 million during the third quarter
of 2015 compared to $9.4 million in the third quarter of 2014 and
earnings per share were $0.22 and $0.36 for the respective periods.
The non-cash pension settlement charge described above negatively
impacted current quarter earnings per share by $0.05 per share.
Gross profit was $71.4 million for the first nine months of
2015, resulting in gross margin of 23.2% compared to 25.0% for the
same period in 2014. Operating income was $29.4 million, resulting
in operating margin of 9.6% for the first nine months of 2015
compared to 12.8% for the same period in 2014. The nine months
gross profit and operating income margin declines were due
principally to the sales volume decreases from the records in 2014,
sales mix changes due to increased shipments and percentages of
shipments of lower margin engine and motor equipped systems, and
the non-cash pension settlement charge described above of 80 and
110 basis points, respectively. Net income was $19.8 million during
the first nine months of 2015 compared to a record $28.3 million
for 2014 and earnings per share were $0.75 and $1.08 for the
respective periods. The non-cash pension settlement charge
described above and currency translation negatively impacted the
first nine months of 2015 earnings per share by $0.09 and $0.02 per
share, respectively.
The Company’s backlog of orders was $138.8 million at September
30, 2015 compared to $170.0 million a year ago and $160.7 million
at December 31, 2014. The decrease in backlog from a year ago is
due primarily to approximately $37.5 million of shipments related
to the PCCP project in the last twelve months. Although not yet
enough to offset our order slowness compared to 2014, we did
experience our highest amount of incoming orders of the last four
quarters in the current quarter ended September 30, 2015.
Approximately $17.8 million of orders related to the PCCP project
remain in the September 30, 2015 backlog total. Approximately $8.1
million of the remaining PCCP project orders are scheduled to ship
during the fourth quarter of 2015 and $9.7 million of related
installation services are scheduled during the first three quarters
of 2016.
Cash and cash equivalents totaled $33.8 million and short-term
bank debt was $2.0 million at September 30, 2015, having been
reduced by $12.0 million since December 31, 2014. The Company also
assumed $2.0 million in bank debt as part of the previously
announced acquisition of Hydro+ SA and Hydro+ Rental SPRL
(collectively the “Hydro companies”) in the third quarter. The
Company has generated $44.9 million of operating cash flow
year-to-date and working capital has risen $11.1 million from
December 31, 2014 to $147.4 million at September 30, 2015. Net
capital expenditures for the first nine months of 2015 of $6.6
million consisted primarily of machinery and equipment, a new
operations facility in Ireland, and other building improvements.
The Company also completed the acquisition of the Hydro companies
for $3.4 million. Capital expenditures for the fourth quarter of
2015 are currently estimated to be in the range of $2 to $4 million
and are expected to be financed through internally-generated
funds.
Jeffrey S. Gorman, President and CEO commented, “During the
third quarter we continued to experience uphill sales challenges
across a number of the markets we serve compared to record prior
year periods, especially those markets with close relationships to
oil, gas and agriculture. However, fire protection pumps remained a
positive source of growth during the quarter as related building
construction markets improved and the Company gained market share,
both in domestic and international areas. While we expect the
near-term, including most of 2016, to be challenging, our outlook
for the long-term is positive based on our proven track record of
providing industry leading high quality products, a long-standing
commitment to customer service and a very strong and flexible
balance sheet. Our longer range outlook was enhanced in September
by our acquisition of the Hydro companies in Belgium which,
combined with our European operations based in The Netherlands,
should position us well in the recovery of the Euro-zone. We also
are proud to make the following announcement regarding our next
dividend increase.”
At its October 22, 2015 meeting, the Board of Directors of the
Company declared a quarterly cash dividend of $0.105 per share on
the common stock of the Company, payable December 10, 2015, to
shareholders of record November 13, 2015. The cash dividend
represents a 5.0% increase over the dividend paid in the previous
quarter. This marks the 263rd consecutive dividend paid by The
Gorman-Rupp Company and the 43rd consecutive year of increased
dividends paid to its shareholders.
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 September 30, Nine Months
Ended September 30, 2015 2014 2015 2014 Net sales $
104,229 $ 110,159 $ 307,354 $ 329,951 Cost of products sold
80,917 82,093 235,986 247,427 Gross
profit 23,312 28,066 71,368 82,524 Selling, general and
administrative expenses 14,363 14,046 41,933
40,390 Operating income 8,949 14,020 29,435 42,134
Other (expense) income - net 99 261 391
207 Income before income taxes 9,048 14,281 29,826
42,341 Income taxes 3,155 4,842 10,029
14,088 Net income $ 5,893 $ 9,439 $ 19,797 $ 28,253
Earnings per share $ 0.22 $ 0.36 $ 0.75 $ 1.08
The Gorman-Rupp Company and
Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (in
thousands of dollars) September 30, December 31, 2015 2014
Assets
Cash and cash equivalents $ 33,822 $ 24,491 Accounts receivable -
net 74,544 70,734 Inventories 82,790 94,760 Deferred income taxes
and other current assets 9,051 10,724 Total
current assets 200,207 200,709 Property, plant and equipment
- net 131,995 133,964 Deferred income taxes and other 4,481
6,313 Goodwill and other intangible assets 41,141
39,918 Total assets $ 377,824 $ 380,904
Liabilities and
shareholders' equity
Accounts payable $ 16,330 $ 17,908 Short-term debt 1,970 12,000
Accrued liabilities and expenses 34,488 34,438
Total current liabilities 52,788 64,346 Pension benefits
5,666 4,496 Postretirement benefits 21,720 21,297
Deferred and other income taxes 8,834 8,798
Total liabilities 89,008 98,937 Shareholders' equity
288,816 281,967 Total liabilities and shareholders'
equity $ 377,824 $ 380,904 Shares outstanding 26,083,623
26,260,543
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version on businesswire.com: http://www.businesswire.com/news/home/20151023005061/en/
The Gorman-Rupp CompanyWayne L. Knabel, Chief Financial Officer,
419-755-1397
Gorman Rupp (NYSE:GRC)
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