The Gorman-Rupp pany(GRC) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Q1 2025 and 2024, covering income, balance sheet, cash flow, and equity, with notes on accounting policies, revenue, debt, and the company's single business segment in pumps and pump systems Consolidated Statements of Income (Q1 2025 vs Q1 2024) | (Dollars in thousands, except per share amounts) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net sales | $163,948 | $159,268 | | Gross profit | $50,332 | $48,394 | | Operating income | $22,125 | $20,429 | | Net income | $12,128 | $7,884 | | Earnings per share | $0.46 | $0.30 | Consolidated Balance Sheet Highlights | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $224,270 | $220,827 | | Total assets | $857,847 | $858,469 | | Total current liabilities | $92,684 | $87,527 | | Total liabilities | $475,776 | $484,669 | | Total equity | $382,071 | $373,800 | Consolidated Statements of Cash Flows (Q1 2025 vs Q1 2024) | (Dollars in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $21,100 | $10,742 | | Net cash used for investing activities | ($3,001) | ($3,854) | | Net cash used for financing activities | ($20,648) | ($9,374) | | Net (decrease) in cash and cash equivalents | ($2,373) | ($2,746) | Net Sales by End Market (Q1 2025 vs Q1 2024) | End Market | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Industrial | $32,617 | $33,560 | | Fire | $32,977 | $32,289 | | Agriculture | $19,463 | $20,406 | | Construction | $18,781 | $21,482 | | Municipal | $22,049 | $20,215 | | Petroleum | $6,927 | $5,902 | | OEM | $10,633 | $8,158 | | Repair parts | $20,501 | $17,256 | | Total net sales | $163,948 | $159,268 | - International sales represented approximately 26% of total net sales for Q1 2025, up from 24% in Q1 2024[22] - The company's backlog (remaining performance obligations) was $217.8 million as of March 31, 2025, with substantially all expected to be recognized as revenue within one year[23] - The company operates in a single business segment: the design, manufacture, and sale of pumps and pump systems[49] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, noting a 2.9% increase in net sales to $163.9 million, improved gross margin, and a 53.8% rise in net income to $12.1 million due to debt refinancing, supported by a strong backlog and consistent dividends - The company's order backlog was $217.8 million at March 31, 2025, compared to $234.2 million a year prior. Incoming orders for Q1 2025 decreased by 0.7% compared to Q1 2024[56] Q1 2025 vs Q1 2024 Performance Summary | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $163.9M | $159.3M | +2.9% | | Gross Profit | $50.3M | $48.4M | +3.9% | | Operating Income | $22.1M | $20.4M | +8.3% | | Net Income | $12.1M | $7.9M | +53.8% | | EPS | $0.46 | $0.30 | +53.3% | - Net sales growth was primarily driven by the municipal (+9.1%), petroleum (+17.4%), OEM (+30.3%), and repair parts (+18.8%) markets, offsetting declines in construction (-12.6%) and agriculture (-4.6%)[60][61] - Interest expense decreased by 38.4% to $6.2 million from $10.1 million in Q1 2024, primarily due to debt refinancing transactions completed in May 2024[65] - The Board of Directors authorized a quarterly dividend of $0.185 per share, marking the 301st consecutive quarterly dividend[57][75] - The company has $48.1 million available for repurchase under its $50.0 million share repurchase program as of March 31, 2025[76] Adjusted EBITDA Reconciliation (Non-GAAP) | (Dollars in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Reported net income –GAAP basis | $12,128 | $7,884 | | Interest expense | $6,203 | $10,073 | | Provision for income taxes | $3,408 | $2,200 | | Depreciation and amortization expense | $6,963 | $7,065 | | Non-cash LIFO expense | $995 | $993 | | Non-GAAP adjusted EBITDA | $29,697 | $28,215 | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company identifies primary market risks as interest rate fluctuations on its variable-rate Senior Term Loan Facility, partially mitigated by swaps, and limited foreign currency exchange rate exposure managed by local currency invoicing - The company is exposed to interest rate risk on its $326.1 million in borrowings under the Senior Term Loan Facility, which bears interest at a variable rate of Adjusted Term SOFR plus 2.0% as of March 31, 2025[85] - To mitigate interest rate risk, the company uses interest rate swap agreements, which are designated as cash flow hedges[86] - A hypothetical 100 basis point increase in interest rates is estimated to increase annual interest expense by approximately $1.8 million[87] - Foreign currency risk is primarily limited to the Euro, Canadian Dollar, South African Rand, and British Pound. Foreign currency transaction losses were minimal at ($0.1) million for Q1 2025[88] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[90] - No changes occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[91] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no material changes to legal proceedings from those previously disclosed in its 2024 Annual Report on Form 10-K - There are no material changes from the legal proceedings previously reported in the Company's 2024 Form 10-K[92] Item 1A. Risk Factors This section supplements previously disclosed risk factors, emphasizing the potential adverse effects of U.S. trade policy and tariffs on imported material costs and international sales, which could impact financial results - A supplemental risk factor was added concerning U.S. trade policy. Tariffs could increase the cost of imported materials and adversely affect the company's business and financial results if not properly mitigated[93] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company did not repurchase common shares during Q1 2025, with approximately $48.1 million remaining available under its authorized share repurchase program as of March 31, 2025 - No shares were purchased as part of the publicly announced repurchase program during the first quarter of 2025[94] - As of March 31, 2025, approximately $48.1 million remained available for repurchase under the authorized program[34][76][94] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - None[96] Item 4. Mine Safety Information This item is not applicable to the company - Not applicable[97] Item 5. Other Information No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025 - During the quarter ended March 31, 2025, no director or officer of the Company adopted or terminated any Rule 10b5-1 trading arrangement[98] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications required by Sarbanes-Oxley Act and financial statements in Inline XBRL format - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[101] - Financial statements are provided in Inline eXtensible Business Reporting Language (XBRL) format[101]