The Gorman-Rupp pany(GRC) - 2023 Q2 - Quarterly Report

Financial Performance - The company's net sales for Q2 2023 were $171.0 million, an increase of 43.6% compared to $119.1 million in Q2 2022, with domestic sales up 50.3% and international sales up 26.8%[59]. - Net sales for the first six months of 2023 were $331.5 million, an increase of 49.8% or $110.3 million compared to $221.2 million in the same period of 2022[68]. - Domestic sales increased by 57.2% or $90.3 million, while international sales rose by 31.5% or $20.0 million compared to the first half of 2022[68]. - Fill-Rite sales contributed $42.9 million in Q2 2023, a significant increase from $13.5 million in the same period of 2022, reflecting a 216.7% growth[60]. - Fill-Rite sales were $82.8 million for the first six months of 2023, a significant increase from $13.5 million in the same period of 2022, contributing to overall sales growth[69]. Profitability - Gross profit for Q2 2023 was $51.7 million, resulting in a gross margin of 30.2%, up from $28.2 million and 23.7% in Q2 2022, reflecting a 650 basis point increase[61]. - Gross profit was $97.2 million with a gross margin of 29.3%, up from $53.7 million and 24.3% in the same period of 2022, reflecting a 500 basis point increase in gross margin[70]. - Operating income surged to $24.3 million in Q2 2023, a 735.3% increase from $2.9 million in Q2 2022, with an operating margin of 14.2%[64]. - Operating income for the first six months of 2023 was $43.4 million, resulting in an operating margin of 13.1%, compared to $12.4 million and 5.6% in the same period of 2022[74]. - Net income for Q2 2023 was $10.5 million, or $0.40 per share, compared to a net loss of $1.0 million, or ($0.04) per share, in Q2 2022, marking a 1151.9% increase[66]. - Net income was $17.0 million, or $0.65 per share, for the first six months of 2023, compared to $6.5 million, or $0.25 per share, in the same period of 2022, representing a 159.6% increase[76]. - Reported net income for Q2 2023 was $10.5 million, compared to a loss of $1.0 million in Q2 2022, representing a significant turnaround[80]. - Non-GAAP adjusted earnings per share for Q2 2023 increased to $0.41 from $0.27 in Q2 2022, reflecting a growth of 51.9%[80]. - Adjusted earnings per share for the first six months of 2023 were $0.68, compared to $0.56 in the same period of 2022, reflecting an unfavorable LIFO impact[77]. Expenses and Debt - SG&A expenses were $24.2 million, or 14.1% of net sales, for Q2 2023, compared to $24.1 million and 20.3% of net sales in Q2 2022, reflecting improved leverage from increased sales[62]. - Selling, general and administrative (SG&A) expenses were $47.4 million, or 14.3% of net sales, compared to $39.9 million and 18.1% in the same period of 2022[71]. - Interest expense increased to $10.5 million in Q2 2023 from $2.3 million in Q2 2022, primarily due to the Fill-Rite acquisition and rising interest rates[65]. - Interest expense increased to $20.7 million for the first six months of 2023, compared to $2.3 million in the same period of 2022, primarily due to the Fill-Rite acquisition financing[75]. - Total debt outstanding as of June 30, 2023, was $439.5 million, with compliance to debt covenants maintained[82]. Cash Flow and Capital Expenditures - Net cash provided by operating activities for the first half of 2023 was $37.9 million, a significant increase from $6.7 million in the same period last year[86]. - Capital expenditures for the first half of 2023 were $13.3 million, with full-year expectations set between $18 million and $20 million[83]. - Cash and cash equivalents at the end of Q2 2023 totaled $12.2 million, with an additional $80.9 million available under the revolving credit facility[81]. Dividends and Share Repurchase - The company authorized a quarterly dividend of $0.175 per share, marking the 294th consecutive quarterly dividend payment[56]. - A share repurchase program of up to $50 million was authorized, with $48.1 million available for repurchase as of June 30, 2023[85]. - The company expects to continue its history of paying regular dividends and aims to improve cash flow and debt leverage in the future[58]. Other Considerations - The company's backlog of orders was $249.8 million as of June 30, 2023, down from $264.7 million a year earlier, but incoming orders increased by 12.0% to $321.0 million in the first half of 2023[55]. - Foreign currency transaction losses for the first half of 2023 were $0.4 million, compared to gains of $0.1 million in the same period of 2022[96]. - A hypothetical increase of 100 basis points in interest rates would increase interest expense by approximately $2.7 million annually[95].