The Gorman-Rupp pany(GRC) - 2025 Q3 - Quarterly Report

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]