Selling, general and administrative (SG&A) expenses were
$14.2 million and 14.3% of net sales for the third quarter of 2019 compared to $14.2 million and 13.8% of net sales for the same period in 2018. SG&A expenses as a percentage of sales increased 50 basis points due principally to the
loss of leverage from lower sales volume.
Operating income was $11.6 million, resulting in an operating margin of
11.7%, for the third quarter of 2019, compared to operating income of $13.1 million and operating margin of 12.8% for the same period in 2018. Operating margin decreased 110 basis points due principally to the loss of leverage from lower sales
volume, partially offset by a favorable LIFO impact.
The Companys effective tax rate decreased to 17.9% for the
third quarter of 2019 from 21.6% for the third quarter of 2018 due primarily to higher research and development tax credits, and a net tax benefit related to foreign derived intangible income (FDII) and global intangible low-tax income (GILTI).
Net income was $9.8 million for the third
quarter of 2019 compared to $10.7 million in the third quarter of 2018, and earnings per share were $0.37 and $0.41 for the respective periods. Earnings per share for the third quarter of 2019 included a favorable LIFO impact of $0.04 per
share. Earnings per share for the third quarter of 2018 included an unfavorable LIFO impact of $0.04 per share.
Net sales
for the first nine months of 2019 were $304.5 million compared to $311.3 million for the first nine months of 2018, a decrease of 2.2% or $6.8 million. Domestic sales increased 5.3% or $10.7 million while international sales
decreased 16.0% or $17.5 million compared to the same period in 2018.
Gross profit was $77.3 million for the
first nine months of 2019, resulting in gross margin of 25.4%, compared to gross profit of $83.4 million and gross margin of 26.8% for the same period in 2018. Gross margin decreased 140 basis points largely as a result of material cost
increases due to inflation, tariffs and higher freight costs, and loss of leverage from lower sales volume. Partially offsetting these items was a favorable LIFO impact of 90 basis points compared to the same period in 2018.
SG&A expenses were $43.5 million and 14.3% of net sales for the first nine months of 2019 compared to
$43.4 million and 14.0% of net sales for the same period in 2018. SG&A expenses as a percentage of sales increased 30 basis points primarily as a result of loss of leverage from lower sales volume.
Operating income was $33.8 million, resulting in an operating margin of 11.1% for the first nine months of 2019, compared
to operating income of $40.0 million and operating margin of 12.8% for the same period in 2018. Operating margin decreased 170 basis points due principally to material cost increases and loss of leverage from lower sales volume, which were
partially offset by selling price increases and a favorable LIFO impact compared to the same period in 2018.
The
Companys effective tax rate decreased to 20.5% for the first nine months of 2019 from 21.6% for the same period last year due primarily to higher research and development tax credits, and a net tax benefit related to FDII and GILTI.
Net income was $27.5 million for the first nine months of 2019 compared to $30.5 million in the first nine months of
2018, and earnings per share were $1.05 and $1.17 for the respective periods. The first nine months of 2018 earnings included an unfavorable LIFO impact of $0.09 per share and were also reduced by non-cash
pension settlement charges of $0.08 per share.
The Companys backlog of orders was $101.4 million at
September 30, 2019 compared to $122.4 million at September 30, 2018 and $113.7 million at December 31, 2018. The backlog at September 30, 2019 decreased 17.1% compared to September 30, 2018 driven by decreased
incoming orders in most of the markets the Company serves, most notably in the construction and petroleum markets.
On
October 24, 2019, the Board of Directors authorized the payment of a quarterly dividend of $0.145 per share on the common stock of the Company, payable December 10, 2019, to shareholders of record as of November 15, 2019. This cash
dividend will represent a 7.4% increase over the regular dividend paid in the previous quarter. This will mark the 279th consecutive quarterly dividend paid by The Gorman-Rupp Company and the 47th consecutive year of increased dividends paid to its
shareholders. The dividend yield on September 30, 2019 was 1.6%.
The Company currently expects to continue its
exceptional history of paying regular quarterly dividends and increased annual dividends. However, any future dividends will be reviewed individually and declared by our Board of Directors at its discretion, dependent on our assessment of the
Companys financial condition and business outlook at the applicable time.
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