Gorman-Rupp Reports Fourth Quarter and Full-Year 2012 Results

Fri Feb 8, 2013 8:50am EST

* Reuters is not responsible for the content in this press release.

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130208:nBw085397a

http://www.businesswire.com/news/home/20130208005397/en

MANSFIELD, Ohio--(Business Wire)--
The Gorman-Rupp Company (NYSE MKT: GRC) reports financial results for the fourth
quarter and twelve months ended December 31, 2012, highlighted by record sales
during 2012 and the attainment of forty consecutive years of increased cash
dividends paid to shareholders. Operating results for 2012 include Pumptron
(Proprietary) Limited ("Pumptron") and the American Turbine Pump companies
("American Turbine") acquired in the third and fourth quarters of 2012,
respectively. 

Net sales for the twelve months ended December 31, 2012 increased 4.5% to a
record $375.7 million compared to $359.5 million during the same period in 2011.
Encouragingly, total international sales increased more than 15% to a record
$136.5 million. Sales improved 6.0% in our larger water end markets and 4.9% in
our non-water end markets. Major contributions to water market sales were
international shipments of pumps for fire protection and an increase in
agricultural market sales, partially offset by reduced construction market
demand for pumps for natural gas drilling applications and from rental
businesses. The increase in non-water market sales was primarily due to
petroleum market shipments and international industrial market shipments. Sales
of repair parts decreased modestly during 2012, as sales during 2011 were
bolstered by pent-up demand. 

Gross profit was $90.2 million in 2012, resulting in gross margin of 24.0%
compared to 24.4% in 2011. The decline in gross margin was principally due to a
less favorable product mix combined with increases in healthcare costs and
depreciation expense. Operating income was $42.2 million resulting in operating
margin of 11.2% compared to 12.0% in 2011. The decline in operating margin was
impacted as well by non-recurring acquisition-related expenses. As noted in the
Company`s third quarter 2012 Form 10-Q, a GAAP-required $2.9 million non-cash
pension settlement charge was subsequently required to be recorded in the fourth
quarter 2012; this was comparable to the $3.0 million non-cash pension
settlement charge recorded in the fourth quarter 2011. Excluding these non-cash
charges, gross margin was 24.5% and 25.0% and operating margin was 12.0% and
12.8% for 2012 and 2011, respectively. 

Net income for 2012 was $28.2 million, our second highest net income, compared
to a record $28.8 million in 2011. Earnings per share were $1.34 and $1.37 for
the respective years. Excluding the decrease of $0.09 and $0.10 per share due to
the non-cash pension settlement charges described above, earnings per share were
$1.43 and $1.47 for 2012 and 2011, respectively. 

Net sales during the fourth quarter 2012 were $88.7 million compared to a record
$93.0 million during the same period in 2011, a decrease of 4.7%. Sales declined
$1.4 million during the quarter in our larger water end markets and $2.0 million
in our non-water end markets compared to the same period last year. The decrease
in water market sales was primarily due to reduced construction market demand
for pumps for natural gas drilling applications and for rental businesses,
partially offset by an increase in agricultural market sales. The quarter`s
decline in non-water market sales was primarily in the OEM market due to reduced
shipments of fabricated products related to power generation equipment. Sales of
repair parts decreased $1.0 million in the fourth quarter of 2012 compared to
the elevated demand experienced during the fourth quarter 2011. 

Gross profit was $18.9 million for the fourth quarter 2012 resulting in gross
margin of 21.3%, comparable to 21.2% in the same period last year. Operating
income was $5.4 million resulting in operating margin of 6.0% compared to 7.9%
in fourth quarter 2011. The decline in operating margin was principally due to
lower volume in the fourth quarter 2012 compared to the impact from record net
sales in the same period last year. In addition, non-recurring
acquisition-related expenses and integration costs combined with increased
healthcare costs and depreciation expense further reduced operating margin by a
total of approximately 100 basis points. Excluding the non-cash pension
settlement charges described above, gross margin was 23.5% and 23.3% and
operating margin was 9.4% and 11.1% for the fourth quarters of 2012 and 2011,
respectively. 

Net income during the quarter was $3.7 million compared to $5.1 million in the
fourth quarter 2011 and earnings per share were $0.17 and $0.24 for the
respective periods. Excluding the non-cash pension settlement charges noted
above, earnings were $0.26 and $0.34 per share for the respective periods. 

The Company`s backlog of orders was $143.4 million at December 31, 2012 compared
to $155.5 million a year ago and $146.7 million at September 30, 2012. The
expected decrease in backlog from December 31, 2011 was primarily due to
anticipated shipments during the twelve months ending December 31, 2012 combined
with anticipated lower incoming orders from the construction, municipal,
industrial and OEM markets. The Company could see the backlog increase in the
second quarter of 2013 by approximately $70 million based on a letter of intent
to the Company to supply major flood control pumps to a member of a joint
venture construction group for a significant New Orleans flood control project
as announced by the Company October 1, 2012. The award of this joint venture
project has been protested by unsuccessful bidders and is expected to be
resolved by mid-2013. 

The Company`s balance sheet continues to remain strong with $20.4 million of
cash and short-term investments at December 31, 2012. The Company generated
$32.6 million in operating cash flow during 2012 compared to $21.1 million
during 2011 and has excellent liquidity and flexibility. Working capital
increased 5.6% to $110.9 million at December 31, 2012 compared to $105.0 million
a year ago largely due to increased inventory, including additional engines to
reduce future delivery lead-times, and from the two acquisitions made during the
latter part of 2012. Short-term debt totaled $22.0 million at year end 2012
which includes $17.0 million borrowed by the Company in the fourth quarter 2012
to finance the acquisition of American Turbine. 

Jeffrey S. Gorman, President and CEO said, "We are pleased with again achieving
record sales primarily as a result of organic revenue growth. However, incoming
orders have moderated from record levels experienced during 2011 in some key end
markets. Although we are encouraged by our growth in the agriculture, petroleum
and international markets this past year, we anticipate the municipal and
construction markets to remain somewhat sluggish for the near future due to the
ongoing uncertain domestic economy. Taking advantage of our strong financial
flexibility, the Company continued to make strategic investments during the year
for future growth. These included the international acquisition of South
Africa-based Pumptron and the domestic acquisition of Texas-based American
Turbine which complement and broaden our existing pump portfolio and provide
additional opportunities for global expansion of our major water markets and
certain non-water markets. Also, we are very proud to celebrate the 80th
anniversary of the Company`s founding during 2013 and we remain committed to
continue creation of long-term value for our shareholders." 

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, the absence
of 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 expected future business environment; (2) changes in government
budgets and in laws and regulations, including taxes; (3) the successful
integration of acquisitions; and (4) the Company`s future cash flow and
financial condition. 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.

 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,                   Twelve Months Ended December 31,                  
                                                 2012                            2011              2012                     2011                     
                                                                                                                                                     
                                                                                                                                                     
 Net sales                                       $       88,657                  $       93,042    $       375,691          $       359,490          
 Cost of products sold                                   69,751                          73,307            285,540                  271,653          
                                                                                                                                                     
 Gross profit                                            18,906                          19,735            90,151                   87,837           
                                                                                                                                                     
 Selling, general and administrative expenses            13,548                          12,407            47,968                   44,843           
                                                                                                                                                     
 Operating income                                        5,358                           7,328             42,183                   42,994           
                                                                                                                                                     
 Other income (expense) - net                            (21     )                       112               264                      (309     )       
                                                                                                                                                     
 Income before income taxes                              5,337                           7,440             42,447                   42,685           
 Income taxes                                            1,649                           2,335             14,244                   13,881           
                                                                                                                                                     
 Net income                                      $       3,688                   $       5,105     $       28,203           $       28,804           
                                                                                                                                                     
 Earnings per share                              $       0.17                    $       0.24      $       1.34             $       1.37             


                                                                                               
 The Gorman-Rupp Company and Subsidiaries                                                      
 Condensed Consolidated Balance Sheets (Unaudited)                                             
 (in thousands of dollars)                                                                     
                                                                                               
                                                   December 31,           December 31,         
                                                   2012                   2011                 
 Assets                                                                                        
 Cash and short-term investments                   $        20,373        $        21,202      
 Accounts receivable - net                                  58,712                 56,419      
 Inventories                                                90,898                 73,193      
 Deferred income taxes and other current assets             5,692                  5,058       
                                                                                               
 Total current assets                                       175,675                155,872     
                                                                                               
 Property, plant and equipment - net                        123,066                114,349     
                                                                                               
 Other assets                                               4,156                  2,998       
                                                                                               
 Goodwill and other intangible assets                       32,286                 25,481      
                                                                                               
 Total assets                                      $        335,183       $        298,700     
                                                                                               
 Liabilities and shareholders' equity                                                          
 Accounts payable                                  $        14,897        $        15,679      
 Short-term debt                                            22,000                 10,000      
 Accrued liabilities and expenses                           27,924                 25,194      
                                                                                               
 Total current liabilities                                  64,821                 50,873      
                                                                                               
 Pension benefits                                           7,517                  6,571       
                                                                                               
 Postretirement benefits                                    22,399                 22,705      
                                                                                               
 Deferred and other income taxes                            5,727                  3,787       
                                                                                               
 Total liabilities                                          100,464                83,936      
                                                                                               
 Shareholders' equity                                       234,719                214,764     
                                                                                               
 Total liabilities and shareholders' equity        $        335,183       $        298,700     
                                                                                               
 Shares outstanding                                         20,996,893             20,990,893  
                                                                                               


Note: The adjusted gross margins, operating margins and earnings per share
amounts eliminate non-cash pension settlementcharges quantified in the text of
this release. Management utilizes these adjusted financial measures to assess
comparativeoperations against those of prior periods without the distortion of
this factor. The Company believes that these non-GAAPfinancial measures will be
useful to investors as well as to assess the continuing strength of the
Company's underlying operations.

The Gorman-Rupp Company
David P. Emmens, Corporate Secretary, 419-755-1477
or
For additional information:
Wayne L. Knabel, Chief Financial Officer, 419-755-1397 

Copyright Business Wire 2013