The Gorman-Rupp Company (NYSE MKT: GRC) reports financial
results for the first quarter ended March 31, 2016.
Net sales during the first quarter were $100.3 million compared
to $99.2 million during the first quarter of 2015. Sales
in both water end markets and non-water end markets were comparable
between periods, increasing 3.2% and 0.8%, respectively.
The first quarter activity in our larger water markets group
included increased sales of $1.2 million in the municipal market
driven primarily by sales of large volume pumps for flood control
and wastewater and $1.3 million in the fire protection market due
to domestic sales. These increases were offset by lower
construction market sales of $1.5 million due principally to the
severe global decline in the drilling of oil and gas. The first
quarter activity in our non-water markets included increased sales
of $1.7 million in the petroleum market due primarily to timing of
long-term infrastructure projects related to mid-stream
transmission of refined petrochemical products. This increase was
offset by lower industrial market sales of $2.2 million also
largely attributable to the downturn in oil and gas production and
the related decline in the offloading of oil from barges due to
excess inventory. Domestic sales increased $2.6 million or 3.9%
driven by the petroleum, municipal and fire protection markets
while international sales decreased $1.5 million or 4.5% due to
lower sales in most major markets.
Gross profit was $22.9 million for the first quarter of 2016,
resulting in gross margin of 22.8%, compared to $23.9 million gross
profit and 24.1% gross margin for the same period in 2015.
Operating income was $9.2 million, resulting in operating margin of
9.2% for the first quarter of 2016, compared to $10.6 million
operating income and 10.7% operating margin for the same period in
2015. The quarter’s gross profit margin decline was due principally
to major market sales mix changes from consolidated contributions
of increased sales in the fire protection and agricultural markets.
The operating margin decline also included higher professional fees
during the first quarter of 2016.
The Company’s backlog of orders was $111.0 million at March 31,
2016 compared to $158.9 million a year ago and $117.1 million at
December 31, 2015. The decrease in backlog from a year ago is
due primarily to approximately $34.2 million of shipments related
to the New Orleans Permanent Canal Closures & Pumps (“PCCP”)
project in the last twelve months along with lower orders in the
construction and industrial markets. Encouragingly, we did
experience an increase of $16.3 million in incoming orders in the
first quarter of 2016 compared to the fourth quarter of 2015 across
most of the major markets the Company serves. Approximately $5.2
million of orders related to the PCCP project remain in the March
31, 2016 backlog total and are expected to ship by the end of the
third quarter of 2016. When completed, this flood control project
will be one of the largest such projects in the world.
The Company generated $20.1 million of operating cash flow
during the first quarter of 2016 and continues to have a strong and
flexible balance sheet. Cash and cash equivalents totaled $40.2
million at March 31, 2016 and working capital increased $6.6
million from December 31, 2015 to a record $152.5 million at March
31, 2016. The increase in working capital was due principally to
higher cash balances partially offset by lower inventories. The
Company invested $1.2 million in the first quarter of 2016
primarily consisting of capital expenditures of machinery and
equipment and building improvements. Capital expenditure
expectations for 2016 remain in the planned range of $12 to $14
million. The Company had no bank debt as of March 31, 2016.
The Company is very proud to have been recognized for the fifth
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 2,500 publicly-traded non-financial
American companies with market capitalizations of $250 million or
more were reviewed and evaluated in depth to identify the 100 that
most “consistently demonstrated transparent accounting practices
and solid corporate governance.” Among the 47 small cap honorees,
Gorman-Rupp was tied with three other companies for the highest
annual rating, and was tied with one other company for the highest
rating over the past four quarters.
Jeffrey S. Gorman, President and CEO commented, “Our financial
performance continues to be impacted by multiple challenges, most
notably the business confidence instability related to the global
price of oil and low commodity prices. While we expect the
near-term to be similarly challenging, we are encouraged by the
quarter’s growth in incoming orders and are cautiously optimistic
that a slow recovery has begun.”
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.
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, 2016 2015 Net sales $ 100,257
$ 99,233 Cost of products sold 77,360 75,318
Gross profit 22,897 23,915
Selling, general and administrative
expenses
13,669 13,312 Operating income 9,228 10,603
Other income - net 31 310 Income before
income taxes 9,259 10,913 Income taxes 2,977 3,638
Net income $ 6,282 $ 7,275 Earnings per share $ 0.24
$ 0.28 The Gorman-Rupp Company and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) (in thousands of
dollars) March 31, December 31, 2016
2015
Assets
Cash and cash equivalents $ 40,191 $ 23,724 Accounts receivable -
net 78,059 76,758 Inventories - net 77,293 82,818 Other current
assets 3,354 6,091 Total current assets
198,897 189,391 Property, plant and equipment - net 127,569
129,887 Other assets 3,981 3,860 Goodwill and other
intangible assets - net 40,876 41,063 Total
assets $ 371,323 $ 364,201
Liabilities and
shareholders' equity
Accounts payable $ 17,476 $ 14,529 Accrued liabilities and expenses
28,903 28,931 Total current liabilities 46,379
43,460 Pension benefits 7,697 9,309 Postretirement
benefits 20,970 20,784 Deferred and other income taxes
3,962 3,627 Total liabilities 79,008 77,180
Shareholders' equity 292,315 287,021
Total liabilities and shareholders' equity $ 371,323 $ 364,201
Shares outstanding 26,083,623 26,083,623
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version on businesswire.com: http://www.businesswire.com/news/home/20160428005500/en/
The Gorman-Rupp CompanyBrigette A. Burnell,
419-755-1246Corporate SecretaryorWayne L. Knabel, 419-755-1397Chief
Financial Officer
Gorman Rupp (NYSE:GRC)
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