The Gorman-Rupp pany(GRC) - 2025 Q2 - Quarterly Results

Financial Results The company reported strong Q2 and year-to-date 2025 financial performance, marked by record sales, substantial net income growth, and improved cash flow driven by strategic debt reduction Second Quarter 2025 Highlights Q2 2025 achieved record net sales of $179.0 million and 90.0% net income growth, driven by strong market performance and reduced interest expense Q2 2025 vs Q2 2024 Financial Performance | Financial Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $179.0M | $169.5M | +5.6% | | Gross Profit | $56.1M | $54.1M | +3.7% | | Gross Margin | 31.3% | 31.9% | -60 bps | | Operating Income | $26.9M | $26.0M | +3.5% | | Net Income | $15.8M | $8.3M | +90.0% | | Diluted EPS | $0.60 | $0.32 | +87.5% | | Adjusted Diluted EPS | $0.60 | $0.54 | +11.1% | Q2 2025 Net Sales Change by Market (YoY) | Market | Sales Change (in millions) | | :--- | :--- | | Municipal | +$3.5 | | Fire Suppression | +$2.8 | | Industrial | +$1.6 | | Petroleum | +$1.5 | | Repair | +$1.5 | | Construction | +$0.1 | | OEM | -$0.3 | | Agriculture | -$1.2 | - Gross margin decreased by 60 basis points to 31.3%, primarily due to a 120 basis point increase in material costs (including LIFO expense), which was partially offset by a 60 basis point improvement from labor and overhead leverage[4] - Interest expense decreased significantly to $6.0 million from $9.0 million in Q2 2024, mainly due to debt refinancing transactions completed in May 2024 and a reduction in outstanding debt[7] - The company reported record incoming orders of $188.0 million, a 15.7% increase compared to the second quarter of the previous year[10] Year to Date 2025 Highlights H1 2025 net sales increased by 4.3% to $343.0 million, with net income up 72.2% and $30.0 million debt reduction First Half 2025 vs First Half 2024 Financial Performance | Financial Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $343.0M | $328.8M | +4.3% | | Gross Profit | $106.4M | $102.5M | +3.8% | | Gross Margin | 31.0% | 31.2% | -20 bps | | Operating Income | $49.0M | $46.5M | +5.4% | | Net Income | $27.9M | $16.2M | +72.2% | | Diluted EPS | $1.06 | $0.62 | +71.0% | | Adjusted EBITDA | $65.0M | $63.6M | +2.2% | - Sales growth in the first half was led by the municipal (+$5.4M), repair (+$4.8M), and fire suppression (+$3.5M) markets. This was partially offset by declines in the construction (-$2.6M) and agriculture (-$2.2M) markets[13] - Total debt was reduced by $30.0 million during the first six months of 2025. Net cash provided by operating activities increased to $48.9 million from $33.4 million in the prior-year period[21][22] - The order backlog was $224.4 million at June 30, 2025, consistent with the prior year, while incoming orders for the first six months increased 7.1% to $365.7 million[20] Management Commentary Management attributes strong financial performance to infrastructure spending and a robust U.S.-based supply chain, optimistic for H2 CEO Commentary CEO attributes record sales and EPS to infrastructure spending and a U.S.-based supply chain, optimistic for H2 - Key growth drivers include infrastructure spending in the municipal market and increased demand related to data center construction[23] - The company's primarily U.S.-based supply chain is considered a competitive advantage, helping to mitigate tariff impacts[23] - Strong cash flow facilitated a $30 million debt reduction in the first half of 2025, improving the company's financial position[23] - Management is optimistic about the second half of the year, supported by positive incoming order trends and current backlog levels[23] Financial Statements Detailed financial statements reveal significant year-over-year improvements in net income and operating cash flow, alongside a reduction in total liabilities Condensed Consolidated Statements of Income Income statement shows year-over-year growth in net sales and operating income, with reduced interest expense boosting net income Income Statement Summary (in thousands) | Account | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $179,045 | $169,513 | $342,994 | $328,781 | | Gross Profit | $56,053 | $54,079 | $106,385 | $102,473 | | Operating Income | $26,912 | $26,049 | $49,037 | $46,477 | | Interest Expense | $(5,990) | $(9,048) | $(12,192) | $(19,120) | | Net Income | $15,797 | $8,335 | $27,925 | $16,219 | Condensed Consolidated Balance Sheets Balance sheet shows total assets of $861.8 million, with total liabilities decreased by $20.7 million due to debt reduction Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $231,290 | $220,827 | | Total Assets | $861,796 | $858,469 | | Long-term Debt, net | $318,564 | $348,097 | | Total Liabilities | $464,028 | $484,669 | | Shareholders' Equity | $397,768 | $373,800 | Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $48.9 million in H1 2025, with $30.0 million used for debt repayment Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $48,888 | $33,397 | | Net Cash used for Investing Activities | $(5,918) | $(4,962) | | Net Cash used for Financing Activities | $(40,931) | $(24,230) | | Net Increase in Cash | $2,772 | $3,727 | - Key uses of cash in H1 2025 included $30.0 million in debt payments, $9.7 million in cash dividends, and $6.0 million in capital expenditures[22][35] Non-GAAP Financial Information Non-GAAP financial measures are presented to provide a clearer view of operational performance by excluding non-comparable factors Reconciliation of GAAP to Non-GAAP Measures Non-GAAP measures like Adjusted EPS and EBITDA provide clearer operational comparison by excluding non-comparable factors - Management uses non-GAAP measures like adjusted earnings, adjusted EPS, and Adjusted EBITDA to assess comparative operations against prior periods without the distortion of non-comparable factors like refinancing costs[25] Adjusted Earnings Per Share (EPS) Reconciliation | Description | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP EPS | $0.60 | $0.32 | $1.06 | $0.62 | | Adjustments (Refinancing, etc.) | $0.00 | $0.22 | $0.00 | $0.22 | | Non-GAAP Adjusted EPS | $0.60 | $0.54 | $1.06 | $0.84 | Adjusted EBITDA Reconciliation (in thousands) | Description | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (GAAP) | $15,797 | $8,335 | $27,925 | $16,219 | | Adjustments | $19,479 | $27,034 | $37,046 | $47,364 | | Non-GAAP Adjusted EBITDA | $35,276 | $35,369 | $64,971 | $63,583 | Other Information This section provides an overview of The Gorman-Rupp Company's business and outlines key risks associated with forward-looking statements About The Gorman-Rupp Company Gorman-Rupp, founded 1933, is a leading global manufacturer of pumps for diverse liquid-handling applications - The company is a leading designer, manufacturer, and international marketer of pumps and pump systems for various liquid-handling applications[24] Forward-Looking Statements Forward-looking statements are subject to risks including supply chain, competition, cybersecurity, and trade policy - The news release contains forward-looking statements based on assumptions that are subject to risks and uncertainties which could cause actual results to differ materially[27] - Key risk factors include supply chain conditions, availability and costs of materials, competitive markets, cybersecurity threats, artificial intelligence challenges, and the impact of U.S. trade policy and tariffs[27][28]