The Gorman-Rupp Company (NYSE MKT: GRC) reports financial
results for the second quarter and six months ended June 30,
2016.
Net sales during the second quarter were $96.3 million compared
to $103.9 million during the second quarter of 2015, a decrease of
7.3% or $7.6 million. Excluding sales from the New Orleans
Permanent Canal Closures & Pumps (“PCCP”) project of $2.5
million in the second quarter of 2016 and $11.7 million for the
same period in 2015, net sales during the quarter increased 1.7%.
Domestic sales decreased 7.7% or $5.3 million while international
sales decreased 6.7% or $2.3 million compared to the same period in
2015. Of the total decrease in net sales in the second quarter,
approximately $0.4 million was due to unfavorable foreign currency
translation.
Sales in the second quarter of 2016 in our larger water markets
decreased 12.0% or $9.2 million. Sales in the municipal market
decreased $4.9 million driven by reduced PCCP project sales noted
above, offset in part by increased shipments attributable to other
Gulf Coast flood control projects and other wastewater
applications. Sales in the fire protection market decreased $3.2
million largely due to reduced international shipments, and sales
in the agriculture market decreased $2.1 million principally due to
wet weather conditions in most locations domestically and lower
farm income. However, sales in the construction market increased
$1.6 million driven primarily by domestic sales of engine-driven
pump systems and pumps for applications independent of oil and
gas.
Sales increased 5.6% or $1.6 million in non-water markets during
the second quarter. The net increase included increased sales of
$2.6 million in the OEM market related to power generation
equipment and services, as well as increased sales of fuel-handling
pumps for military applications.
Net sales for the six months ended June 30, 2016 were $196.5
million compared to $203.1 million during the same period in 2015,
a decrease of 3.3% or $6.6 million. Excluding sales from the PCCP
project of $7.9 million in the first half of 2016 and $20.5 million
in the first half of 2015, net sales for the first half increased
3.3%. Domestic sales decreased 2.1% or $2.8 million and
international sales decreased 5.6% or $3.8 million. Of the total
decrease in net sales in the first half of 2016, approximately $0.9
million was due to unfavorable foreign currency translation.
Sales in the first half of 2016 in our larger water markets
decreased 5.7% or $8.4 million. Sales in the municipal market
decreased $3.7 million driven by reduced PCCP project sales noted
above, offset in part by increased shipments attributable to other
Gulf Coast flood control projects and other wastewater
applications. Sales decreased $1.9 million in the fire protection
market due to a decline in international shipments, and sales in
the agriculture market decreased $1.3 million principally due to
wet weather conditions in most locations domestically and lower
farm income.
Sales increased 3.1% or $1.8 million in non-water markets. The
net increase was primarily due to increased sales of $3.4 million
in the OEM market related to power generation equipment and
services, and increased sales of $1.3 million in the petroleum
market due to mid-stream transmission of refined petrochemical
products. Partially offsetting these increases was a decrease of
$2.9 million in the industrial market 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.
Gross profit was $23.2 million for the second quarter of 2016,
resulting in gross margin of 24.1%, compared to gross profit of
$24.1 million and gross margin of 23.2% for the same period in
2015. Operating income was $9.5 million, resulting in operating
margin of 9.9% for the second quarter of 2016, compared to
operating income of $9.9 million and operating margin of 9.5% for
the same period in 2015. The quarter’s gross profit margin increase
was due principally to sales mix changes and lower pension expense
as a result of a non-cash pension settlement charge of 100 basis
points in the second quarter of 2015 which has not recurred this
year. The operating margin increase also was largely driven by an
additional 40 basis points from the pension settlement charge in
the second quarter of 2015 which has not recurred this year.
Net income was $6.6 million during the second quarters of 2016
and 2015 and earnings per share were $0.25 for both periods. The
non-cash pension settlement charge reduced the second quarter of
2015 earnings per share by $0.04 per share.
Gross profit was $46.1 million for the first six months of 2016,
resulting in gross margin of 23.5%, compared to gross profit of
$48.1 million and gross margin of 23.7% for the same period in
2015. Operating income was $18.8 million, resulting in operating
margin of 9.5% for the first six months of 2016, compared to
operating income of $20.5 million and operating margin of 10.1% for
the same period in 2015. The gross profit and operating income
margin declines for the first half were due principally to the
sales volume decreases from 2015 to 2016. The gross margin and
operating margin for the first six months of 2015 were reduced by a
non-cash pension settlement charge of 40 and 70 basis points,
respectively, which has not recurred this year.
Net income was $12.9 million during the first six months of 2016
compared to $13.9 million for the same period in 2015 and earnings
per share were $0.49 and $0.53 for the respective periods. The
non-cash pension settlement charge reduced the first six months of
2015 earnings per share by $0.04 per share.
The Company’s backlog of orders was $107.7 million at June 30,
2016 compared to $144.2 million at June 30, 2015 and $117.1 million
at December 31, 2015. Excluding PCCP orders in 2015 and 2016,
the backlog at June 30, 2016 is down 10.1% as compared to June 30,
2015. The decrease in backlog from last year is due primarily to
approximately $25.0 million of shipments related to the PCCP
project in the last twelve months along with lower orders in the
petroleum and agriculture markets. Incoming orders during the
second quarter of 2016 remained steady as compared to the first
quarter of 2016 as orders increased in the municipal and
construction markets while orders decreased in the fire protection
and OEM markets. Approximately $2.7 million of orders related to
the PCCP project remain in the June 30, 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 $33.6 million of operating cash flow
during the first half of 2016 and continues to have a strong and
flexible balance sheet. Cash and cash equivalents totaled $49.5
million at June 30, 2016 and working capital increased $9.8 million
from December 31, 2015 to a record $155.7 million at June 30, 2016.
The increase in working capital was due principally to higher cash
balances partially offset by lower inventories and accounts
receivable. The Company invested $1.7 million in the second quarter
of 2016 primarily consisting of capital expenditures of machinery
and equipment. Capital expenditures for the 2016 year are currently
expected to be in the range of $7 to $10 million. The Company had
no bank debt as of June 30, 2016.
Jeffrey S. Gorman, President and CEO commented, “Considering the
comparative impacts of the PCCP project, we are pleased to have
realized some modest sales increases in our first two quarters of
2016. However, the second half of most years is seasonally slower,
and the remainder of 2016 will compare to a second half of 2015
that included substantial PCCP sales. As periods of economic and
business volatility persist, the Company remains focused on
operational efficiencies and will continue to manage expenses
closely as we do not yet see stable sales growth occurring in the
near future. Our strong balance sheet provides us with the
flexibility to continue to evaluate acquisition opportunities
and new product development that will help add value to our
operations over the longer-term.”
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 remaining 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 June 30, Six Months Ended June 30, 2016 2015 2016 2015
Net sales $ 96,265 $ 103,892 $ 196,522 $ 203,125 Cost
of products sold 73,025 79,751 150,385
155,069 Gross profit 23,240 24,141 46,137 48,056
Selling, general and administrative
expenses
13,702 14,258 27,371 27,570
Operating income 9,538 9,883 18,766 20,486 Other
income - net 94 (18 ) 125 292
Income before income taxes 9,632 9,865 18,891 20,778 Income taxes
3,012 3,236 5,989 6,874
Net income $ 6,620 $ 6,629 $ 12,902 $ 13,904 Earnings
per share $ 0.25 $ 0.25 $ 0.49 $ 0.53 The Gorman-Rupp
Company and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited) (in thousands of dollars)
June 30, December 31, 2016 2015
Assets
Cash and cash equivalents $ 49,541 $ 23,724 Accounts receivable -
net 74,676 76,758 Inventories - net 75,551 82,818 Other current
assets 2,561 6,091 Total current assets
202,329 189,391 Property, plant and equipment - net 125,375
129,887 Other assets 3,867 3,860 Goodwill and other
intangible assets - net 40,413 41,063 Total
assets $ 371,984 $ 364,201
Liabilities and
shareholders' equity
Accounts payable $ 15,298 $ 14,529 Accrued liabilities and expenses
31,345 28,931 Total current liabilities 46,643
43,460 Pension benefits 4,084 9,309 Postretirement
benefits 21,140 20,784 Deferred and other income taxes
3,943 3,627 Total liabilities 75,810 77,180
Shareholders' equity 296,174 287,021
Total liabilities and shareholders' equity $ 371,984 $ 364,201
Shares outstanding 26,083,623 26,083,623
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version on businesswire.com: http://www.businesswire.com/news/home/20160729005099/en/
The Gorman-Rupp CompanyWayne L. Knabel, Chief Financial Officer,
419-755-1397
Gorman Rupp (NYSE:GRC)
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