The Gorman-Rupp Company (NYSE: GRC) reports financial results
for the fourth quarter and year ended December 31, 2024.
Fourth Quarter 2024 Highlights
- Net sales of $162.7 million increased 1.3%, or $2.1 million,
compared to the fourth quarter of 2023
- Fourth quarter net income was $11.0 million, or $0.42 per
share, compared to net income of $9.0 million, or $0.34 per share,
for the fourth quarter of 2023
- Interest expense decreased due to debt refinancing in the
second quarter of 2024 and reduced debt levels
- Incoming orders for the fourth quarter of 2024 increased 15.8%,
compared to the fourth quarter of 2023
Net sales for the fourth quarter of 2024 were $162.7 million
compared to net sales of $160.6 million for the fourth quarter of
2023, an increase of 1.3% or $2.1 million. The increase in sales
was due primarily to the impact of pricing increases taken in the
first quarter of 2024.
Sales increased $6.6 million in the municipal market and $2.2
million in the repair market due to domestic flood control and
wastewater projects related to increased infrastructure investment.
Sales also increased $2.0 million in the agriculture market. These
increases were offset by a sales decrease of $5.8 million in the
fire suppression market primarily resulting from backlog returning
to more normal levels. Fire suppression sales in 2023 were up
significantly compared to 2022 as the Company was working to return
backlog and lead times to normal levels, which resulted in higher
2023 sales and a tougher year-over-year comparison for 2024. Sales
for the fourth quarter of 2024 also decreased $0.9 million in the
petroleum market, $0.8 million in the construction market, $0.7
million in the industrial market, and $0.5 million in the OEM
market.
Gross profit was $49.2 million for the fourth quarter of 2024,
resulting in gross margin of 30.2%, compared to gross profit of
$50.9 million and gross margin of 31.7% for the same period in
2023. The 150 basis point decrease in gross margin included a 220
basis point increase in labor and overhead expenses driven by
increased healthcare costs. The increase in labor and overhead
expenses was partially offset by a 70 basis point improvement in
cost of material, which consisted of a 140 basis point improvement
from the realization of selling price increases partially offset by
an increase in LIFO2 expense of 70 basis points.
Selling, general and administrative (“SG&A”) expenses were
$25.0 million and 15.4% of net sales for the fourth quarter of 2024
compared to $26.0 million and 16.2% of net sales for the same
period in 2023.
Operating income was $21.1 million for the fourth quarter of
2024, resulting in an operating margin of 13.0%, compared to
operating income of $21.8 million and operating margin of 13.6% for
the same period in 2023. Operating margin in the fourth quarter of
2024 decreased 60 basis points compared to the same period in 2023
primarily due to increased labor and overhead expenses, partially
offset by decreased SG&A expenses.
Interest expense was $6.7 million for the fourth quarter of 2024
compared to $10.1 million for the same period in 2023. The decrease
in interest expense was due primarily to a series of refinancing
transactions the Company completed on May 31, 2024 as well as a
decrease in outstanding debt.
Net income was $11.0 million, or $0.42 per share, for the fourth
quarter of 2024 compared to net income of $9.0 million, or $0.34
per share, in the fourth quarter of 2023.
Adjusted EBITDA1 was $29.0 million and 17.8% of sales for the
fourth quarter of 2024 compared to $29.1 million and 18.2% of sales
for the fourth quarter of 2023.
Full-Year 2024 Highlights
- Net sales of $659.7 million increased 0.1%, or $0.2 million,
compared to 2023
- Net income was $40.1 million, or $1.53 per share, compared to
net income of $35.0 million, or $1.34 per share, in 2023
- Adjusted earnings per share1 for 2024 and 2023 were $1.75 and
$1.37, respectively
- Adjusted EBITDA1 of $124.6 million for 2024 increased $2.9
million, or 2.4%, from $121.7 million in 2023
- Total debt decreased $43.0 million, further improving
leverage
Net sales for 2024 were $659.7 million compared to net sales of
$659.5 million for 2023, an increase of 0.1% or $0.2 million. The
increase in sales was due primarily to the impact of pricing
increases taken in the first quarter of 2024.
Sales increased $21.5 million in the municipal market and $5.3
million in the repair market due to domestic flood control and
wastewater projects related to increased infrastructure investment,
$2.6 million in the OEM market primarily related to computer
cooling, and $1.0 million in the petroleum market primarily driven
by increased international refueling applications. Offsetting these
increases was a decrease of $22.1 million in the fire suppression
market primarily resulting from backlog returning to more normal
levels. Fire suppression sales in 2023 were up significantly
compared to 2022 as the Company was working to return backlog and
lead times to normal levels, which resulted in higher 2023 sales
and a tougher year-over-year comparison for 2024. Fire suppression
incoming orders for 2024 were up 1.5% when compared to 2023. Sales
in 2024 also decreased $5.5 million in the industrial market and
$1.8 million in the construction market, and $0.8 million in the
agriculture market.
Gross profit was $204.3 million for 2024, resulting in gross
margin of 31.0%, compared to gross profit of $196.3 million and
gross margin of 29.8% in 2023. The 120 basis point increase in
gross margin included a 200 basis point improvement in cost of
material, which consisted of a reduction in LIFO2 expense of 30
basis points, a favorable impact of 20 basis points related to the
amortization of acquired Fill-Rite customer backlog which occurred
in 2023 and did not reoccur in 2024, and a 150 basis point
improvement from the realization of selling price increases. These
improvements were partially offset by an 80 basis point increase in
labor and overhead expenses as a percent of sales driven by
increased healthcare costs.
SG&A expenses were $100.5 million and 15.2% of net sales in
2024 compared to $96.7 million and 14.7% of net sales in 2023.
SG&A expenses for 2024 included $1.3 million of refinancing
transaction costs and a $1.1 million gain on the sale of a fixed
asset. SG&A expenses increased due to healthcare costs, as well
as increased selling activity.
Operating income was $91.4 million for 2024, resulting in an
operating margin of 13.9%, compared to operating income of $87.0
million and operating margin of 13.2% in 2023. Operating margin in
2024 increased 70 basis points compared to the same period in 2023
primarily due to improved cost of material, partially offset by
increased labor, overhead, and SG&A expenses.
Interest expense was $33.6 million for 2024 compared to $41.3
million in 2023. The decrease in interest expense was due primarily
to a series of debt refinancing transactions the Company completed
on May 31, 2024. In addition to reducing interest expense, the
refinancing also extended and staggered the Company’s debt
maturities. The Company upsized, amended, and extended the existing
Senior Term Loan Facility from $350.0 million to $370.0 million,
amended and extended the existing $100.0 million revolving Credit
Facility, and issued $30.0 million in new 6.40% Senior Secured
Notes. The proceeds from these transactions, as well as $10.0
million of cash on hand, were used to retire the Company’s $90.0
million unsecured Subordinated Credit Facility.
Other income (expense), net was $7.3 million of expense for 2024
compared to $1.8 million of expense in 2023. Other expense for 2024
included a $4.4 million write-off of unamortized previously
deferred debt financing fees and a $1.8 million prepayment fee
related to the early retirement of the unsecured Subordinated
Credit Facility.
Net income was $40.1 million, or $1.53 per share, for 2024
compared to net income of $35.0 million, or $1.34 per share, for
2023. Adjusted earnings per share1 for 2024 were $1.75 per share
compared to $1.37 per share for 2023.
Adjusted EBITDA1 was $124.6 million and 18.9% of net sales for
2024 compared to $121.7 million and 18.5% of net sales for
2023.
The Company’s backlog of orders was $206.0 million at December
31, 2024 compared to $218.1 million at December 31, 2023. Incoming
orders for 2024 were $659.3 million, or an increase of 6.8%,
compared to 2023.
Net cash provided by operating activities for 2024 was $69.8
million compared to $98.2 million for 2023 with the decrease driven
primarily by the timing of deferred revenue and customer deposits
and accrued liabilities and expenses. Capital expenditures for 2024
were $14.3 million and consisted primarily of machinery and
equipment. Capital expenditures for the full-year 2025 are
presently planned to be approximately $20.0 million. Total debt
decreased $43.0 million during 2024.
Scott A. King, President and CEO, commented, “We are pleased
that we achieved an improvement in gross margin and operating
income in 2024, as well as a 28% increase in adjusted earnings per
share for the year. We also reduced our debt by $43 million, which
along with our refinancing in the second quarter of 2024, resulted
in a significant reduction in interest expense and positions us
well to further reduce our debt and interest expense going forward.
In addition to our strong operating results, we were proud to
increase our dividend for the 52nd consecutive year, and in January
of 2025 we declared our 300th consecutive quarterly dividend,
marking 75 years of continued dividends. As we begin 2025 our
outlook remains positive. While sales were less than expected in
2024, we continued to see strong incoming orders during the year
and ended the year with healthy backlog to begin the new year. As
demonstrated by our increase in municipal sales in 2024, we remain
well positioned to continue to benefit from infrastructure spending
and the strong demand for flood control and storm water management.
We remain focused on delivering long-term profitable growth.
“I appreciate the Gorman-Rupp team’s continued efforts to
contribute to another successful year, and I am grateful to our
customers, suppliers, and shareholders for their on-going
support.”
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, write-off of
unamortized previously deferred debt financing fees, and
refinancing costs. Adjusted earnings per share is earnings per
share excluding amortization of customer backlog per share,
write-off of unamortized previously deferred debt financing fees
per share, and refinancing costs 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, write-off of
unamortized previously deferred debt financing fees, refinancing
costs, 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 U.S. Bureau
of Labor Statistics. Interim LIFO calculations are based on
management’s estimate of the expected year-end inflation index and,
as such, are subject to adjustment each quarter. When inflation
increases, the LIFO reserve and non-cash expense increase.
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 December 31, Year
Ended December 31,
2024
2023
2024
2023
Net sales
$
162,704
$
160,565
$
659,667
$
659,511
Cost of products sold
113,511
109,628
455,339
463,258
Gross profit
49,193
50,937
204,328
196,253
Selling, general and administrative expenses
25,013
25,996
100,506
96,660
Amortization expense
3,100
3,153
12,379
12,552
Operating income
21,080
21,788
91,443
87,041
Interest expense
(6,734
)
(10,126
)
(33,621
)
(41,273
)
Other income (expense), net
(668
)
(422
)
(7,329
)
(1,807
)
Income before income taxes
13,678
11,240
50,493
43,961
Provision for income taxes
2,701
2,264
10,378
9,010
Net income
$
10,977
$
8,976
$
40,115
$
34,951
Earnings per share
$
0.42
$
0.34
$
1.53
$
1.34
The Gorman-Rupp Company Condensed Consolidated Balance Sheets
(Unaudited) (thousands of dollars, except share data)
December 31,
Assets
2024
2023
Cash and cash equivalents
$
24,213
$
30,518
Accounts receivable, net
87,636
89,625
Inventories, net
99,205
104,156
Prepaid and other
9,773
11,812
Total current assets
220,827
236,111
Property, plant and equipment, net
131,822
134,872
Other assets
23,838
24,841
Goodwill and other intangible assets, net
481,982
494,534
Total assets
$
858,469
$
890,358
Liabilities and shareholders'
equity Accounts payable
$
24,752
$
23,886
Current portion of long-term debt
18,500
21,875
Accrued liabilities and expenses
44,275
54,915
Total current liabilities
87,527
100,676
Pension benefits
6,629
11,500
Postretirement benefits
22,178
22,786
Long-term debt, net of current portion
348,097
382,579
Other long-term liabilities
20,238
23,358
Total liabilities
484,669
540,899
Shareholders' equity
373,800
349,459
Total liabilities and shareholders' equity
$
858,469
$
890,358
Shares outstanding
26,227,540
26,193,998
The Gorman-Rupp Company
Condensed Consolidated Statements
of Cash Flows (Unaudited)
(thousands of dollars, except
share data)
Year
Ended December 31,
2024
2023
Cash flows from operating activities: Net income
$
40,115
$
34,951
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
27,897
28,496
LIFO expense
5,142
6,891
Pension expense
2,715
3,604
Stock based compensation
4,008
3,252
Contributions to pension plans
(5,089
)
(2,250
)
Amortization of debt issuance fees
6,405
3,014
Deferred income tax charge (benefit)
(1,417
)
(414
)
Gain on sale of property, plant, and equipment
(1,195
)
-
Other
387
1,335
Changes in operating assets and liabilities: Accounts
receivable, net
1,180
3,752
Inventories, net
(2,031
)
559
Accounts payable
1,222
(1,518
)
Commissions payable
(3,603
)
9
Deferred revenue and customer deposits
(5,636
)
5,773
Income taxes
2,129
1,226
Accrued expenses and other
(1,801
)
6,316
Benefit obligations
(598
)
3,229
Net cash provided by operating activities
69,830
98,225
Cash flows from investing activities: Capital additions
(14,319
)
(20,835
)
Proceeds from sale of property, plant, and equipment
2,453
-
Other
-
672
Net cash used for investing activities
(11,866
)
(20,163
)
Cash flows from financing activities: Cash dividends
(19,009
)
(18,447
)
Treasury share repurchases
(267
)
(1,029
)
Proceeds from bank borrowings
400,000
5,000
Payments to banks for borrowings
(443,000
)
(39,500
)
Debt issuance fees
(746
)
-
Other
(115
)
(551
)
Net cash used for financing activities
(63,137
)
(54,527
)
Effect of exchange rate changes on cash
(1,132
)
200
Net increase (decrease) in cash and cash equivalents
(6,305
)
23,735
Cash and cash equivalents: Beginning of period
30,518
6,783
End of period
$
24,213
$
30,518
The Gorman-Rupp Company Non-GAAP Financial Information (thousands
of dollars, except per share data)
Three Months Ended December 31, Year Ended
December 31,
2024
2023
2024
2023
Adjusted earnings: Reported net income – GAAP basis
$
10,977
$
8,976
$
40,115
$
34,951
Amortization of acquired customer backlog
-
-
-
863
Write-off of unamortized previously deferred debt financing fees
-
-
3,506
-
Refinancing costs
-
-
2,413
-
Non-GAAP adjusted earnings
$
10,977
$
8,976
$
46,034
$
35,814
Three Months Ended
December 31, Year Ended December 31,
2024
2023
2024
2023
Adjusted earnings per share: Reported earnings per
share – GAAP basis
$
0.42
$
0.34
$
1.53
$
1.34
Amortization of acquired customer backlog
-
-
-
0.03
Write-off of unamortized previously deferred debt financing fees
-
-
0.13
-
Refinancing costs
-
-
0.09
-
Non-GAAP adjusted earnings per share
$
0.42
$
0.34
$
1.75
$
1.37
Three Months Ended December 31, Year Ended December 31,
2024
2023
2024
2023
Adjusted earnings before interest, taxes, depreciation and
amortization: Reported net income – GAAP basis
$
10,977
$
8,976
$
40,115
$
34,951
Interest expense
6,734
10,126
33,621
41,273
Provision for income taxes
2,701
2,264
10,378
9,010
Depreciation and amortization expense
6,924
7,300
27,897
28,496
Non-GAAP earnings before interest, taxes, depreciation and
amortization
27,336
28,666
112,011
113,730
Amortization of acquired customer backlog
-
-
-
1,085
Write-off of unamortized previously deferred debt financing fees
-
-
4,438
-
Refinancing costs
-
-
3,055
-
Non-cash LIFO expense
1,697
477
5,142
6,891
Non-GAAP adjusted earnings before interest, taxes, depreciation and
amortization
$
29,033
$
29,143
$
124,646
$
121,706
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250206642159/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.
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