The Gorman-Rupp Company (NYSE MKT: GRC) reports financial
results for the fourth quarter and year ended December 31,
2014.
Net sales during the fourth quarter of 2014 increased 14.6% to a
record $105.0 million compared to $91.6 million during the same
period in 2013. Domestic sales increased 18.9% or $11.2 million and
international sales increased 6.7% or $2.2 million compared to the
fourth quarter of 2013. Sales in water end markets increased 13.7%
or $8.9 million and sales in non-water end markets increased 16.9%
or $4.5 million during the quarter.
The fourth quarter increase in water end market sales was
largely due to additional sales in the fire protection market of
$4.2 million driven primarily by international sales and additional
sales in the construction market of $1.4 million principally for
pumps for rental businesses. Also, sales increased $2.9 million in
the municipal market primarily due to large volume pumps related to
flood control, partially offset by decreased sales for smaller
infrastructure projects. Increased sales in non-water markets
during the fourth quarter of 2014 were primarily due to added
shipments for the industrial market of $5.1 million related to
fracking and the contribution from the recent acquisition of Bayou
City Pump Company.
Net sales for the year ended December 31, 2014 were a record
$434.9 million compared to $391.7 million for the year 2013, an
increase of 11.0%. Domestic sales increased 16.1% or $41.3 million
while international sales were up 3.2% on a constant currency basis
but were largely offset by currency translation of $2.4 million.
Sales increased 10.4% or $28.6 million in water end markets
primarily due to additional sales in the municipal market of $20.0
million driven by large volume pumps related to wastewater and
flood control. Also, sales increased in the construction market by
$6.1 million principally for pumps for rental businesses and for
oil and gas drilling support within North America, and in the fire
protection market by $3.8 million driven primarily by domestic
sales. These increases were largely offset by lower agriculture
market sales of $4.3 million driven by wet weather conditions in
several domestic regions. Sales increased 12.5% or $14.7 million
for the year ended December 31, 2014 in non-water markets primarily
due to additional shipments of $13.3 million for the industrial
market related to fracking and $8.5 million from the recent
acquisition of Bayou City Pump Company.
Gross profit was $25.0 million for the fourth quarter of 2014,
resulting in gross margin of 23.8% compared to 23.4% for the same
period in 2013. Operating income was $11.2 million, resulting in
operating margin of 10.6% for the fourth quarter of 2014 compared
to 8.9% for the same period in 2013. The gross margin and operating
margin for the fourth quarter of 2013 were reduced by 50 and 70
basis points, respectively, due to a non-cash pension settlement
charge which did not recur in the fourth quarter of 2014.
Net income was $7.9 million during the fourth quarter of 2014
compared to $7.2 million in the fourth quarter of 2013 and earnings
per share were $0.30 and $0.28 for the respective periods. The
fourth quarter of 2013 included a non-recurring asset sale gain of
$0.06 per share offset by $0.01 per share due to a non-cash pension
settlement charge, both of which did not recur in the fourth
quarter of 2014.
Gross profit was a record $107.6 million in 2014 resulting in
gross margin of 24.7% compared to 23.9% for 2013. Operating income
also was a record $53.3 million resulting in operating margin of
12.3% for 2014 compared to 10.7% in 2013. The gross margin and
operating margin for 2013 were reduced by 70 and 110 basis points,
respectively, due to a non-cash pension settlement charge which did
not recur in 2014.
Net income for 2014 was a record $36.1 million compared to $30.1
million for 2013 and earnings per share were $1.38 and $1.15 for
the respective years. Earnings per share for 2013 included a
reduction of $0.10 due to a non-cash pension settlement charge
offset by $0.06 per share for a non-recurring asset sale gain, both
of which did not recur in 2014. Currency translation negatively
impacted earnings in 2014 by $0.01 per share.
The Company’s backlog of orders was $160.7 million at December
31, 2014 compared to $182.2 million a year ago and $170.0 million
at September 30, 2014. The decrease in backlog from a year ago is
principally due to record shipments during 2014, including
approximately $14.4 million related to the Permanent Canal Closure
Project (“PCCP”) to supply major flood control pumps to a member of
a joint venture construction group for a significant New Orleans
flood control project. Excluding the PCCP project, incoming orders
increased 12.3% in 2014 compared to 2013. Approximately $43.2
million of the PCCP project remain in the December 31, 2014 backlog
total and are expected to be shipped by the end of 2015.
Cash and cash equivalents totaled $24.7 million and short-term
bank debt was $12.0 million at December 31, 2014. The Company
generated $68.5 million in earnings before interest, taxes,
depreciation and amortization during 2014 and invested $14.1
million in buildings and machinery and equipment. Capital additions
in 2015 are expected to be $18-$20 million. Working capital rose
$6.6 million from December 31, 2013 to $135.1 million at December
31, 2014.
Jeffrey S. Gorman, President and CEO said, “Our fourth quarter
results were strong and contributed significantly to another record
year of revenue and earnings for the Company accomplished through
increased sales in all markets except agriculture. Our notable
increases were in municipal projects, construction including rental
sales, and fire pump systems. Operationally we continued to perform
well during our growth demonstrated by solid gross and operating
margins.
“We are pleased with Patterson Pump Company’s performance on the
PCCP project for which shipments of the large flood control pumps
began this year and will be an even larger contributor in 2015.
Also, 2015 results will include a complete year of our Bayou City
Pump Company acquisition which adds market diversity for our
petroleum handling products and services.
“We have not seen any major order cancellations, but the recent
dramatic decline in the price of oil may have a negative impact in
the near term on some of the markets we serve such as construction,
including rental equipment, and fire protection. Also, there may be
additional headwinds for 2015 due to continuing unfavorable
exchange rate alignments compounded by ongoing international
economic uncertainties.
“Although more cautious than a few months ago, we continue to
believe we are well positioned for the year ahead based on our
strong and flexible balance sheet, quality products and the
diversity and depth of our markets.”
Safe Harbor StatementIn 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 and changes in commodity
pricing and capital and consumer spending; (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 New Orleans
flood control 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 December 31, Year Ended December 31, 2014 2013 2014
2013 Net sales $ 104,974 $ 91,607 $ 434,925 $ 391,665
Cost of products sold 79,939 70,142 327,366
298,010 Gross profit 25,035 21,465 107,559 93,655
Selling, general and administrative
expenses
13,864 13,355 54,254 51,734
Operating income 11,171 8,110 53,305 41,921
Other income (expense) - net
222 2,477 429 2,356 Income
before income taxes 11,393 10,587 53,734 44,277 Income taxes
3,505 3,415 17,593 14,173 Net income $
7,888 $ 7,172 $ 36,141 $ 30,104 Earnings per share $ 0.30 $
0.28 $ 1.38 $ 1.15 The Gorman-Rupp
Company and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited) (in thousands of dollars) December 31, December
31, 2014 2013
Assets
Cash and cash equivalents $ 24,746 $ 31,376 Accounts receivable -
net 70,734 59,374 Inventories 94,760 89,946 Deferred income taxes
and other current assets 9,201 8,593 Total
current assets 199,441 189,289 Property, plant and equipment
- net 133,964 131,189 Other assets 6,305 3,657
Goodwill and other intangible assets 39,927 31,503
Total assets $ 379,637 $ 355,638
Liabilities and
shareholders' equity
Accounts payable $ 17,908 $ 17,882 Short-term debt 12,000 9,000
Accrued liabilities and expenses 34,438 33,878
Total current liabilities 64,346 60,760 Pension benefits
4,496 - Postretirement benefits 21,297 18,393
Deferred and other income taxes 7,531 12,345
Total liabilities 97,670 91,498 Shareholders' equity
281,967 264,140 Total liabilities and shareholders'
equity $ 379,637 $ 355,638 Shares outstanding 26,260,543
26,253,043
The Gorman-Rupp CompanyWayne L. Knabel, Chief Financial Officer,
419-755-1397
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