Gorman-Rupp Company (NYSE:GRC) FY Conference Summary Company Overview - Gorman-Rupp Company specializes in manufacturing pumps and pump systems, primarily serving various industries [2][3] - The company has a strong U.S.-based supply chain, with 90% of purchases occurring from U.S. entities, which has provided stability during geopolitical events and COVID-19 [2][3] - Gorman-Rupp has a long history of dividend payments, with 53 consecutive years of increases, placing it among the top 50 companies in the U.S. for such a record [4][26] Financial Performance - The company has experienced approximately 90% growth in top-line and earnings over the last four years, with half attributed to the acquisition of PhilRite and half from organic growth [18][19] - Organic growth was about 15% in both 2022 and 2023, following COVID-19 recovery [19] - Adjusted EBITDA increased by 2.5 times since 2020, reaching $125 million in 2024, representing about 19% of sales [20] - As of Q3 2025, sales are up 3.8%, with a backlog of $234 million, an increase of $28 million from the end of 2024 [22] Market Position and Strategy - Gorman-Rupp holds approximately 0.75% of the $80 billion global pump market, which is highly fragmented with hundreds of competitors [3][54] - The company operates through a world-class distribution network, which allows for efficient sales without a large in-house sales force [16] - The acquisition of PhilRite, a fuel transfer business, has strengthened Gorman-Rupp's market position, capturing 65% of the farmer and contractor fuel transfer market in North America [8][19] Growth Opportunities - Gorman-Rupp is focused on organic growth through market share expansion, new product introductions, and benefiting from trends in infrastructure spending and data centers [5][30] - The company is exploring M&A opportunities, particularly in the pump sector, with a preference for U.S.-based companies or those with strong market positions [35][39] - Future acquisitions are expected to be larger, with a target revenue range of $25 million to $150 million [32] Competitive Landscape - The largest competitor in the pump industry is Grundfos, with other notable companies including Xylem, Pentair, and Flowserve [53] - Gorman-Rupp competes with numerous companies, none of which represent more than 5% of its supply chain or customer base, contributing to the industry's stability [54] Key Takeaways - Gorman-Rupp's strong U.S. supply chain and focus on customer satisfaction have positioned it well in a fragmented market [2][30] - The company has a solid financial foundation, with a history of growth and a commitment to dividends [18][26] - Future growth will be driven by both organic initiatives and strategic acquisitions, with a focus on maintaining a competitive edge in the pump industry [31][35]

Financial Performance - The company's net sales for Q3 2025 were $172.8 million, an increase of 2.8% or $4.6 million compared to Q3 2024's $168.2 million[65] - Gross profit for Q3 2025 was $50.4 million, with a gross margin of 29.2%, down from $52.7 million and 31.3% in Q3 2024[67] - Operating income for Q3 2025 was $21.5 million, a decrease of 10.1% from $23.9 million in Q3 2024, resulting in an operating margin of 12.4%[69] - Net income for Q3 2025 was $11.3 million, or $0.43 per share, down from $12.9 million, or $0.49 per share in Q3 2024[72] - Gross profit for the first nine months of 2025 was $156.8 million, with a gross margin of 30.4%, down from $155.1 million and 31.2% in 2024[76] - Operating income was $70.5 million for the first nine months of 2025, with an operating margin of 13.7%, slightly down from $70.4 million and 14.2% in 2024[78] - Net income increased by 34.8% to $39.3 million, or $1.49 per share, compared to $29.1 million, or $1.11 per share in 2024[81] - Adjusted EBITDA for the first nine months of 2025 was $97.3 million, up from $95.6 million in the same period of 2024[84] Orders and Backlog - Incoming orders for the first nine months of 2025 were $550.2 million, representing a 10.9% increase compared to the same period in 2024[61] - The company's backlog of orders was $234.2 million as of September 30, 2025, up from $206.0 million at December 31, 2024[61] Expenses and Costs - The company recognized $3.0 million in one-time facility optimization costs during Q3 2025, which are expected to lead to annualized savings of $2.0 million to $2.5 million[60] - SG&A expenses for Q3 2025 were $25.9 million, representing 15.0% of net sales, compared to $25.7 million and 15.3% in Q3 2024[68] - Selling, general and administrative (SG&A) expenses were $77.0 million, representing 14.9% of net sales, compared to $75.5 million and 15.2% in 2024[77] - Interest expense decreased to $5.8 million in Q3 2025 from $7.8 million in Q3 2024, a reduction of 25.5%[70] - Interest expense decreased by 33.1% to $18.0 million due to debt refinancing and a reduction in outstanding debt[79] Cash Flow and Debt - Cash and cash equivalents totaled $42.9 million as of September 30, 2025, with an additional $99.4 million available under the revolving credit facility[88] - Total debt outstanding was $325.8 million, with $295.8 million due in 2029 and $30.0 million due in 2031, and the company was in compliance with its debt covenants[89] - Net cash provided by operating activities for the first nine months of 2025 was $91.2 million, an increase from $60.6 million in the same period of 2024[93] - Net cash used for financing activities was $60.8 million in the first nine months of 2025, primarily due to net payments on bank borrowings of $45.0 million and dividend payments of $14.6 million[95] - The Company had $295.8 million in borrowings under the Senior Term Loan Facility as of September 30, 2025, with interest rates ranging from 0.50% to 2.25%[101] - A hypothetical increase of 100 basis points in interest rates would increase interest expense by approximately $1.6 million annually[103] Taxation - The company expects its effective tax rate for 2026 to be between 21.0% and 23.0%[71] - The effective tax rate increased to 23.4% for the first nine months of 2025, compared to 20.9% in 2024, influenced by changes in U.S. tax regulations[82] Capital Expenditures and Investments - Capital expenditures for the first nine months of 2025 were $12.5 million, primarily for machinery and equipment, with full-year 2025 planned at approximately $20.0 million[90] - Investing activities for the first nine months of 2025 totaled $12.4 million, primarily for capital expenditures, compared to $8.0 million in the same period of 2024[94] Shareholder Returns - The Board of Directors authorized a quarterly dividend of $0.19 per share, marking the 303rd consecutive quarterly dividend[91] - A share repurchase program of up to $50.0 million has been authorized, with $48.1 million available for repurchase as of September 30, 2025[92] Market Performance - Sales increased by $7.5 million in the municipal market and $5.9 million in the industrial market, while the construction market saw a decrease of $7.2 million due to a slowdown in activity[75] Foreign Currency - Foreign currency transaction losses for the nine months ended September 30, 2025, were ($0.3) million, with no gains or losses reported for the same period[104] Operating Activities - The increase in cash provided by operating activities was primarily due to increased net income and an increase in operating liabilities compared to the same period last year[93]

Core Insights - Gorman-Rupp Company (GRC) reported earnings per share (EPS) of $0.52, slightly below the expected $0.55, and revenue of approximately $172.8 million, missing the estimated $174.6 million [1][6] Financial Performance - For Q3 ending September 30, 2025, GRC's net sales were $172.8 million, reflecting a 2.8% increase from the same period in 2024 [2] - Net income decreased to $11.3 million, or $0.43 per share, down from $12.9 million, or $0.49 per share, in the previous year [2] - The adjusted EPS for the quarter was $0.52, consistent with the reported figure [2] Financial Ratios - The price-to-earnings (P/E) ratio is approximately 24.91, indicating investor confidence in the company's earnings potential [3] - The price-to-sales ratio is about 1.92, suggesting a reasonable market valuation relative to sales [3] - The enterprise value to sales ratio stands at 2.38, reflecting the company's total valuation compared to its revenue [3] Valuation Metrics - The enterprise value to operating cash flow ratio is around 18.78, highlighting GRC's valuation in relation to its cash flow from operations [4] - An earnings yield of about 4.01% shows the percentage of each dollar invested that was earned by the company [4] - The debt-to-equity ratio is approximately 0.85, indicating a moderate level of debt relative to equity [4] Liquidity Position - GRC's current ratio is about 2.39, demonstrating its ability to cover short-term liabilities with short-term assets [5] - This ratio indicates a strong liquidity position, ensuring the company can meet its immediate financial obligations [5]

Financial Performance - Net sales for Q3 2025 were $172.8 million, an increase of 2.8% or $4.6 million compared to Q3 2024[3] - Net income for Q3 2025 was $11.3 million, or $0.43 per share, down from $12.9 million, or $0.49 per share in Q3 2024[11] - Incoming orders for Q3 2025 were $184.5 million, an increase of 19.2% or $29.7 million compared to the same quarter last year[8] - Gross profit for Q3 2025 was $50.4 million, resulting in a gross margin of 29.2%, down from 31.3% in Q3 2024[5] - Operating income for Q3 2025 was $21.5 million, with an operating margin of 12.4%, compared to $23.9 million and 14.2% in Q3 2024[7] - Year-to-date net sales for 2025 were $515.8 million, an increase of 3.8% or $18.8 million compared to the same period in 2024[13] - Adjusted EBITDA for Q3 2025 was $32.3 million, compared to $32.0 million in Q3 2024[12] - Earnings per share (EPS) for Q3 2025 was $0.43, down from $0.49 in Q3 2024[31] - Non-GAAP adjusted earnings for Q3 2025 were $13.653 million, compared to $12.919 million in Q3 2024[37] Expenses and Liabilities - SG&A expenses were $25.9 million, or 15.0% of net sales, compared to $25.7 million and 15.3% in Q3 2024[6] - Total debt decreased by $45.0 million through the first nine months of 2025[19] - The company's effective tax rate for Q3 2025 was 26.0%, up from 19.6% in Q3 2024[10] - Total liabilities decreased to $464.744 million as of September 30, 2025, from $484.669 million at the end of 2024[33] Cash Flow and Assets - Cash and cash equivalents increased to $42.937 million as of September 30, 2025, compared to $24.213 million at the end of 2024[33] - Total assets rose to $869.901 million as of September 30, 2025, compared to $858.469 million at the end of 2024[33] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $91.230 million, compared to $60.574 million in 2024, indicating improved cash flow[34] Profitability - Gross profit for the nine months ended September 30, 2025, was $156.805 million, compared to $155.135 million for the same period in 2024, reflecting a slight increase[31] - Net income for the nine months ended September 30, 2025, was $39.269 million, up 35% from $29.138 million in 2024[31] Other Costs - The company reported a facility optimization cost of $2.309 million for the nine months ended September 30, 2025[37]

Core Insights - Gorman-Rupp (GRC) reported quarterly earnings of $0.52 per share, missing the Zacks Consensus Estimate of $0.55 per share, but showing an increase from $0.49 per share a year ago, resulting in an earnings surprise of -5.45% [1] - The company posted revenues of $172.83 million for the quarter ended September 2025, which was below the Zacks Consensus Estimate by 0.23%, and an increase from $168.18 million year-over-year [2] - Gorman-Rupp shares have increased approximately 29.5% year-to-date, outperforming the S&P 500's gain of 14.6% [3] Earnings Outlook - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook, including current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.43 on revenues of $164.55 million, and for the current fiscal year, it is $2.04 on revenues of $680.77 million [7] Industry Context - The Manufacturing - General Industrial industry, to which Gorman-Rupp belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Core Points - The Gorman-Rupp Company has declared a quarterly cash dividend of $0.19 per share, representing a 2.7% increase from the previous quarter's dividend of $0.185 per share [1][2] - This marks the 303rd consecutive quarterly dividend and the 53rd consecutive year of increased dividends, placing Gorman-Rupp among the top 50 U.S. public companies for dividend payments [2] Company Overview - Founded in 1933, The Gorman-Rupp Company is a leading designer, manufacturer, and international marketer of pumps and pump systems for various applications including water, wastewater, construction, and industrial uses [3]

Core Insights - The Gorman-Rupp Company reported a net sales increase of 2.8% to $172.8 million for Q3 2025 compared to Q3 2024, driven by growth in various markets, particularly industrial and municipal [2][6][12] - The company undertook facility optimization, reducing the number of National Pump Company operating facilities from six to three, which is expected to yield annualized savings of $2.0 to $2.5 million [1][21] - Net income for Q3 2025 was $11.3 million, or $0.43 per share, down from $12.9 million, or $0.49 per share in Q3 2024, with adjusted earnings per share increasing to $0.52 [6][10][18] Financial Performance - Gross profit for Q3 2025 was $50.4 million, resulting in a gross margin of 29.2%, down from 31.3% in Q3 2024, impacted by facility optimization costs and increased material costs [4][7] - Selling, general and administrative expenses were $25.9 million, representing 15.0% of net sales, slightly improved from 15.3% in Q3 2024 [5][14] - Operating income for Q3 2025 was $21.5 million, with an operating margin of 12.4%, compared to $23.9 million and 14.2% in Q3 2024 [5][7] Market Dynamics - Sales growth was noted across most markets, with significant increases in the industrial market ($5.3 million) and municipal market ($2.1 million), while the construction market saw a decline of $4.6 million [3][12] - Incoming orders for Q3 2025 reached $184.5 million, a 19.2% increase compared to the same quarter last year, indicating strong demand across various sectors [6][19] Year-to-Date Highlights - For the first nine months of 2025, net sales were $515.8 million, up 3.8% from $497.0 million in the same period of 2024 [11] - Year-to-date net income was $39.3 million, or $1.49 per share, compared to $29.1 million, or $1.11 per share in the first nine months of 2024 [18] - The company's backlog of orders increased to $234.2 million as of September 30, 2025, compared to $206.0 million at the end of 2024 [19]

Core Insights - AuditBoard and Protiviti have launched two AI-driven solutions to enhance risk management and audit processes within enterprises [2][5] - The solutions aim to improve data quality, streamline workflows, and provide strategic value to Governance, Risk, and Compliance (GRC) teams [2][3] Company Overview - AuditBoard is recognized as a leading AI-powered GRC platform, trusted by over 50% of Fortune 500 companies for managing risk [6] - Protiviti is a global consulting firm that collaborates with AuditBoard to deliver tailored solutions across various sectors, including finance and technology [7][9] Product Features - Generative AI Integrations allow organizations to create agents that communicate directly with the AuditBoard platform [3] - Deep ERP Integration facilitates continuous monitoring of financial controls by driving essential financial information into AuditBoard [4] - Integrated Reasoning enables AI agents to connect risk, control, and issue data for improved search capabilities [7] - Intelligent Pre-population uses historical data to generate context-aware language for risk justification and mitigation [7] - Automated Data Retrieval enhances efficiency by eliminating manual stakeholder involvement in data collection [7] Strategic Implications - The collaboration between AuditBoard and Protiviti signifies a shift from reactive compliance to proactive risk intelligence, enhancing organizational maturity and strategic value [5] - The integration of AI into daily business operations is expected to elevate assurance and improve decision-making processes [5]

Core Viewpoint - Gorman-Rupp (GRC) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it focuses on earnings estimate revisions, which are strongly correlated with near-term stock price movements [2][3]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to price movements based on their buying or selling actions [3]. Business Improvement Indicators - The increase in earnings estimates and the Zacks rating upgrade for Gorman-Rupp suggest an improvement in the company's underlying business, which could lead to higher stock prices [4]. Importance of Earnings Estimate Revisions - Research indicates a strong correlation between earnings estimate revisions and stock movements, making it beneficial for investors to track these revisions [5]. - The Zacks Rank system effectively leverages earnings estimate revisions to classify stocks into five groups, with a proven track record of performance [6]. Specifics on Gorman-Rupp's Earnings Estimates - Gorman-Rupp is projected to earn $2.04 per share for the fiscal year ending December 2025, with no year-over-year change expected [7]. - Over the past three months, the Zacks Consensus Estimate for Gorman-Rupp has increased by 2.5% [7]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of "buy" and "sell" ratings across its universe of over 4,000 stocks, with only the top 20% receiving favorable ratings [8][9]. - Gorman-Rupp's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for near-term price appreciation [9].

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