The Gorman-Rupp Company (NYSE MKT: GRC) reports financial
results for the third quarter and nine months ended September 30,
2016.
Net sales during the third quarter were $91.3 million compared
to $104.2 million during the third quarter of 2015, a decrease of
12.4% or $12.9 million. Excluding sales from the New Orleans
Permanent Canal Closures & Pumps (“PCCP”) project of $1.6
million in the third quarter of 2016 and $9.8 million for the same
period in 2015, net sales during the quarter decreased 5.0%.
Domestic sales decreased 19.3% or $13.9 million while international
sales increased 3.3% or $1.0 million compared to the same period in
2015.
Sales in the third quarter of 2016 in our larger water markets
decreased 8.9% or $6.5 million compared to the third quarter of
2015. Sales in the municipal market decreased $5.1 million driven
by reduced PCCP project sales noted above, offset in part by
increased shipments attributable to other flood control projects
and clean water applications. Sales in the agriculture market
decreased $1.8 million principally due to wet weather conditions in
many locations domestically and lower farm income. However, sales
in the construction market increased $2.0 million due primarily to
sales to rental businesses as a result of flooding in several areas
domestically and a fleet purchase by a new customer. The remainder
of the overall sales decrease was largely due to reduced shipments
of repair parts.
Sales decreased 20.3% or $6.4 million in non-water markets
during the third quarter of 2016 compared to the third quarter of
2015. Sales in the industrial market decreased $4.2 million and
sales in the petroleum market decreased $1.4 million, both
principally attributable to the continued slowdown in oil and gas
production.
Net sales for the nine months ended September 30, 2016 were
$287.9 million compared to $307.4 million during the same period in
2015, a decrease of 6.3% or $19.5 million. Excluding sales from the
PCCP project of $9.5 million in the first nine months of 2016 and
$30.3 million in the first nine months of 2015, net sales for the
first nine months increased 0.5%. Domestic sales decreased 8.1% or
$16.7 million and international sales decreased 2.8% or $2.8
million. Of the total decrease in net sales in the first nine
months of 2016, approximately $0.9 million was due to unfavorable
foreign currency translation.
Sales in the first nine months of 2016 in our larger water
markets decreased 6.8% or $14.9 million compared to the same period
in 2015. Sales in the municipal market decreased $8.8 million
driven by reduced PCCP project sales noted above, offset in part by
increased shipments attributable to other flood control projects
and clean water and wastewater applications. Sales decreased $3.1
million in the agriculture market principally due to wet weather
conditions in many locations domestically and lower farm income,
and sales in the fire protection market decreased $2.2 million due
to market softness domestically and in countries in the Middle
East.
Sales decreased 5.3% or $4.6 million in non-water markets during
the first nine months of 2016 compared to the same period in 2015.
Increased sales of $2.6 million in the OEM market related to power
generation equipment and services were offset by a decrease of $7.1
million in the industrial market largely attributable to the
continued slowdown in oil and gas production.
Gross profit was $22.7 million for the third quarter of 2016,
resulting in gross margin of 24.8%, compared to gross profit of
$23.3 million and gross margin of 22.4% for the same period in
2015. The quarter’s gross profit margin increase was due
principally to favorable sales mix changes and a non-cash pension
settlement charge of 120 basis points in the third quarter of 2015
which did not recur in the same period this year, partially offset
by lower leverage due to sales volume decreases. Operating income
was $9.9 million, resulting in operating margin of 10.8% for the
third quarter of 2016, compared to operating income of $8.9 million
and operating margin of 8.6% for the same period in 2015. The
operating margin improvement was largely driven by a non-cash
pension settlement charge totaling 180 basis points in third
quarter of 2015 which did not recur in the same period this year
and a gain on the sale of property, plant and equipment in the
third quarter of 2016 of 110 basis points, offset by lower
operating leverage due to sales volume decreases.
Net income was $6.9 million during the third quarter of 2016
compared to $5.9 million in the third quarter of 2015 and earnings
per share were $0.27 and $0.22 for the respective periods. Gain on
the sale of property, plant and equipment increased the third
quarter of 2016 earnings by $0.03 per share. Conversely, the
non-cash pension settlement charge in the third quarter of 2015
reduced earnings by $0.05 per share.
Gross profit was $68.8 million for the first nine months of
2016, resulting in gross margin of 23.9%, compared to gross profit
of $71.4 million and gross margin of 23.2% for the same period in
2015. The gross profit margin increase was due principally to a
non-cash pension settlement charge of 80 basis points in the first
nine months of 2015 which did not recur in the same period this
year. Operating income was $28.6 million, resulting in operating
margin of 9.9% for the first nine months of 2016, compared to
operating income of $29.4 million and operating margin of 9.6% for
the same period in 2015. The operating margin improvement also was
largely driven by a non-cash pension settlement charge totaling 110
basis points in the first nine months of 2015 which did not recur
in the same period this year and a gain on the sale of property,
plant and equipment of 30 basis points in the first nine months of
2016, offset by lower operating leverage due to sales volume
decreases.
Net income was $19.8 million during the first nine months of
both 2016 and 2015 and earnings per share were $0.76 and $0.75 for
the respective periods. Gain on the sale of property, plant and
equipment increased the first nine months of 2016 earnings by $0.03
per share. Conversely, the non-cash pension settlement charge
reduced the first nine months of 2015 earnings by $0.09 per
share.
The Company’s backlog of orders was $102.8 million at September
30, 2016 compared to $138.8 million at September 30, 2015 and
$117.1 million at December 31, 2015. Excluding the PCCP
project in 2015 and 2016, the backlog at September 30, 2016 was
down 16.0% as compared to September 30, 2015. In addition to the
impact of PCCP, backlog has been impacted by lower orders in the
petroleum and fire protection markets. Encouragingly, the municipal
wastewater sector appears to be gaining momentum as incoming orders
have increased as compared to the first nine months of 2015.
Approximately $1.2 million of orders related to the PCCP project
remain in the September 30, 2016 backlog total and are expected to
ship by the end of the fourth quarter of 2016.
The Company generated $52.2 million of operating cash flow
during the first nine months of 2016 and continues to have a strong
and flexible balance sheet. Cash and cash equivalents totaled $63.7
million at September 30, 2016 and working capital increased $16.9
million from December 31, 2015 to a record $162.8 million at
September 30, 2016. The increase in working capital was due
principally to higher cash balances partially offset by lower
inventories and increased customer deposits. Net capital
expenditures for the first nine months of 2016 of $5.6 million
consisted primarily of machinery and equipment, a new operations
facility in Africa, and other building improvements. Capital
expenditures for the fourth quarter of 2016 are currently expected
to be in the range of $1 to $3 million. The Company had no bank
debt as of September 30, 2016.
At its October 27, 2016 meeting, the Board of Directors of the
Company declared a quarterly cash dividend of $0.115 per share on
the common stock of the Company, payable December 9, 2016, to
shareholders of record November 15, 2016. The cash dividend
represents a 9.5% increase over the dividend paid in the previous
quarter. This will mark the 267th consecutive quarterly dividend
paid by The Gorman-Rupp Company and the 44th consecutive year of
increased dividends paid to its shareholders. This increase
continues to position the Company in the top 50 of all U.S. public
companies with respect to number of years of increased dividend
payments.
Jeffrey S. Gorman, President and CEO commented, “Although we are
seeing some improvements in the municipal, industrial and
construction markets compared to last year, persistent weakness of
capital spending within the oil & gas and agriculture markets
continues to be a headwind. In addition, with the completion of the
PCCP project nearly at hand, comparisons of revenue with last year
need to be kept in mind. As revenue growth continues to be
challenging, we remain focused on operating efficiencies and will
continue to manage expenses closely. Along with our strong balance
sheet and increase in dividend, we will continue to position
ourselves for future growth and increasing shareholder
returns.”
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) 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; (8) if acquired businesses do
not meet performance expectations, assets acquired could be subject
to impairment; 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
For additional information, contact Wayne L. Knabel, Chief
Financial Officer, Telephone (419) 755-1397.
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 protection, heating,
ventilating and air conditioning (HVAC), military and other
liquid-handling applications.
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, 2016
2015 2016 2015 Net sales $91,346 $104,229 $287,868
$307,354 Cost of products sold 68,676 80,917 219,061 235,986
Gross profit 22,670 23,312 68,807 71,368 Selling, general
and administrative expenses 12,819 14,363 40,190 41,933
Operating income 9,851 8,949 28,617 29,435 Other income -
net 551 99 676 391 Income before income taxes 10,402 9,048
29,293 29,826 Income taxes 3,475 3,155 9,464 10,029 Net
income $6,927 $5,893 $19,829 $19,797 Earnings per share
$0.27 $0.22 $0.76 $0.75 The
Gorman-Rupp Company and Subsidiaries Condensed Consolidated Balance
Sheets (Unaudited) (in thousands of dollars) September 30,
December 31, 2016 2015
Assets
Cash and cash equivalents $63,681 $23,724 Accounts receivable - net
73,889 76,758 Inventories - net 74,524 82,818 Other current assets
6,146 6,091 Total current assets 218,240 189,391
Property, plant and equipment - net 124,723 129,887 Other
assets 4,159 3,860 Goodwill and other intangible assets -
net 40,227 41,063 Total assets $387,349 $364,201
Liabilities and
shareholders' equity
Accounts payable $14,996 $14,529 Accrued liabilities and expenses
40,434 28,931 Total current liabilities 55,430 43,460
Pension benefits 2,472 9,309 Postretirement benefits 21,307
20,784 Deferred and other income taxes 7,105 3,627
Total liabilities 86,314 77,180 Shareholders' equity 301,035
287,021 Total liabilities and shareholders' equity $387,349
$364,201 Shares outstanding 26,091,123 26,083,623
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version on businesswire.com: http://www.businesswire.com/news/home/20161028005072/en/
The Gorman-Rupp CompanyWayne L. Knabel, Chief Financial Officer,
419-755-1397
Gorman Rupp (NYSE:GRC)
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