The Gorman-Rupp Company (NYSE MKT: GRC) reports financial
results for the second quarter and six months ended June 30,
2015.
Net sales during the second quarter were $103.9 million compared
to $109.7 million during the second quarter of 2014. Domestic sales
decreased 10.8% or $8.3 million while international sales increased
7.9% or $2.5 million compared to the same period in 2014. Sales in
the water end markets were comparable between periods as they
increased $700,000 or 1.0% and sales in non-water end markets
decreased 19.2% or $6.5 million during the quarter. Of the total
$5.8 million decrease in net sales in the second quarter, $2.1
million or 36.2% of the decrease was due to unfavorable foreign
currency translation.
The second quarter activity in water end market sales included
$8.2 million of increased sales in the fire protection market due
to higher international and domestic sales of $5.7 million and $2.5
million, respectively. This increase was offset by $3.9 million
lower sales in the construction market, including rental sales, due
primarily to the decline in drilling of oil and gas in North
America. Sales in the municipal market decreased $2.2 million
driven by lower sales of large volume pumps for wastewater and
water supply projects, despite increased shipments of $9.1 million
related to the Permanent Canal Closures and Pumps (“PCCP”) project.
Also, sales decreased in the agricultural market $1.8 million
principally due to expected depressed domestic farm income in 2015
and unseasonably wet weather conditions in most locations
domestically. Decreased sales in the non-water end markets during
the second quarter of 2015 were primarily due to $5.1 million of
lower sales in the OEM market related to power generation equipment
and pumps for military applications. In addition, sales in the
petroleum market decreased $900,000 due primarily to lower
international shipments.
Net sales for the six months ended June 30, 2015 were $203.1
million compared to a record $219.8 million during the same period
in 2014, a decrease of 7.6%. Domestic sales decreased 10.0% or
$15.0 million and international sales decreased 2.4% or $1.7
million. Of the total decrease in net sales during the six month
period ended June 30, 2015, $4.3 million or 25.7% was due to
unfavorable currency translation. Sales in water end markets
decreased 5.5% or $8.6 million due to $8.2 million of lower sales
in the construction market, including rental sales, due primarily
to the global decline in new oil and gas drilling which affected
both domestic and international sales. Sales in the municipal
market decreased $3.9 million driven by lower sales of large volume
pumps for wastewater and water supply projects, despite increased
shipments of $16.5 million related to the PCCP project. Sales
decreased $4.8 million in the agricultural market primarily due to
expected depressed domestic farm income in 2015 and unseasonably
wet weather conditions in most locations domestically. These
decreases were offset by $6.7 million of increased sales in the
fire protection market principally due to higher international
sales. Sales decreased 12.5% or $8.1 million in non-water markets
primarily due to lower sales in the OEM market related to power
generation equipment and pumps for military applications and
residential appliances.
Due to recent increased retirements and a related surge in lump
sum pension payments, the Company recorded a GAAP-required $1.5
million non-cash pension settlement charge during the second
quarter of 2015 relating to its defined benefit pension plan. We
expect that a non-cash charge will recur during the remainder of
this year as additional expected retirements occur. The rate of
retirements was less in 2014 and in the first quarter of 2015 and a
settlement charge was not required in those periods.
Gross profit was $24.1 million for the second quarter of 2015,
resulting in gross margin of 23.2% compared to 24.5% for the same
period in 2014. Operating income was $9.9 million, resulting in
operating margin of 9.5% for the second quarter of 2015 compared to
12.2% for the same period in 2014. The quarter’s gross profit and
operating income margin declines were due principally to the sales
volume decreases from 2014 to 2015, and the non-cash pension
settlement charge described above of 100 and 140 basis points,
respectively. Net income was $6.6 million during the second quarter
of 2015 compared to $8.9 million in the second quarter of 2014 and
earnings per share were $0.25 and $0.34 for the respective periods.
The non-cash pension settlement charge described above and currency
translation negatively impacted current quarter earnings per share
by $0.04 and $0.01 per share, respectively.
Gross profit was $48.1 million for the first six months of 2015,
resulting in gross margin of 23.7% compared to 24.8% for the same
period in 2014. Operating income was $20.5 million, resulting in
operating margin of 10.1% for the first six months of 2015 compared
to 12.8% for the same period in 2014. The first half’s gross profit
and operating income margin declines were due principally to the
sales volume decreases from the records of 2014 to 2015, and the
non-cash pension settlement charge described above of 40 and 70
basis points, respectively. Net income was $13.9 million during the
first six months of 2015 compared to $18.8 million for 2014 and
earnings per share were $0.53 and $0.72 for the respective periods.
The non-cash pension settlement charge described above and currency
translation negatively impacted the first six months of 2015
earnings per share by $0.04 and $0.01 per share, respectively.
The Company’s backlog of orders was $144.2 million at June 30,
2015 compared to $173.8 million a year ago and $160.7 million at
December 31, 2014. The decrease in backlog from a year ago is due
principally to record shipments during the second half of 2014,
approximately $30.8 million of shipments related to the PCCP
project, and a decline in order rates due to inconsistent economic
conditions in most markets. Approximately $27.4 million of orders
related to the PCCP project remain in the June 30, 2015 backlog
total. Approximately $18.7 million of the remaining PCCP project
orders are scheduled to ship during the last half of 2015 and $8.7
million of related installation services are scheduled during the
first three quarters of 2016.
Cash and cash equivalents totaled $26.0 million and short-term
bank debt was $6.0 million at June 30, 2015, having been reduced by
$6.0 million since December 31, 2014. Working capital rose $12.5
million from December 31, 2014 to a record $148.9 million at June
30, 2015. Net capital expenditures for 2015, consisting primarily
of machinery and equipment, a new operations facility in Ireland
and other building improvements, are currently estimated to be in
the range of $11 to $13 million and are expected to be financed
through internally-generated funds.
Jeffrey S. Gorman, President and CEO commented, “During the
second quarter we continued to see demand weaknesses across most of
the diverse markets we serve compared to record prior year periods,
as lower gas and oil production, reduced U.S. farm income, flooding
in key agricultural growing regions and the strong U.S. dollar
continue to negatively impact most of our business. One bright spot
during the quarter was increased sales in the fire protection
market in both domestic and international areas. While focusing on
producing and delivering high quality products, we will continue to
actively evaluate and execute our strategic initiatives to control,
and as warranted, reduce costs to correspond to lower sales levels
until we obtain more confidence in improved business
conditions.”
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.
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, 2015 2014 2015 2014
Net sales $ 103,892 $ 109,728 $ 203,125 $ 219,792 Cost of
products sold 79,751 82,824
155,069 165,334 Gross profit 24,141 26,904
48,056 54,458
Selling, general and administrative
expenses
14,258 13,483 27,570
26,344 Operating income 9,883 13,421 20,486 28,114
Other (expense) income - net (18 ) (193 )
292 (54 ) Income before income taxes 9,865
13,228 20,778 28,060 Income taxes 3,236 4,368
6,874 9,246 Net income $ 6,629
$ 8,860 $ 13,904 $ 18,814 Earnings per
share $ 0.25 $ 0.34 $ 0.53 $ 0.72 The Gorman-Rupp
Company and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited) (in thousands of dollars) June 30,
December 31, 2015 2014
Assets
Cash and cash equivalents $ 25,989 $ 24,491 Accounts receivable -
net 76,785 70,734 Inventories 93,224 94,760 Deferred income taxes
and other current assets 9,576 10,724 Total
current assets 205,574 200,709 Property, plant and equipment
- net 131,416 133,964 Deferred income taxes and other 6,034
6,313 Goodwill and other intangible assets 39,053
39,918 Total assets $ 382,077 $ 380,904
Liabilities and
shareholders' equity
Accounts payable $ 17,897 $ 17,908 Short-term debt 6,000 12,000
Accrued liabilities and expenses 32,772 34,438
Total current liabilities 56,669 64,346 Pension benefits
5,247 4,496 Postretirement benefits 21,589 21,297
Deferred and other income taxes 8,780 8,798
Total liabilities 92,285 98,937 Shareholders' equity
289,792 281,967 Total liabilities and shareholders'
equity $ 382,077 $ 380,904 Shares outstanding 26,260,543
26,260,543
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version on businesswire.com: http://www.businesswire.com/news/home/20150724005321/en/
The Gorman-Rupp CompanyWayne L. Knabel, 419-755-1397Chief
Financial Officer
Gorman Rupp (NYSE:GRC)
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