grc20240630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-6747

The Gorman-Rupp Company

(Exact name of registrant as specified in its charter)

Ohio		34-0253990
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


600 South Airport Road, Mansfield, Ohio		44903
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (419) 755-1011

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, without par value	GRC	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On July 29, 2024 there were 26,227,540 common shares, without par value, of The Gorman-Rupp Company outstanding.

The Gorman-Rupp Company

Three and Six Months Ended June 30, 2024 and 2023

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income - Three months ended June 30, 2024 and 2023 - Six months ended June 30, 2024 and 2023	3
	Consolidated Statements of Comprehensive Income - Three months ended June 30, 2024 and 2023 - Six months ended June 30, 2024 and 2023	3
	Consolidated Balance Sheets - June 30, 2024 and December 31, 2023	4
	Consolidated Statements of Cash Flows - Six months ended June 30, 2024 and 2023	5
	Consolidated Statements of Equity - Six months ended June 30, 2024 and 2023	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	23

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Information	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
EX-31.1	Section 302 Principal Executive Officer (PEO) Certification
EX-31.2	Section 302 Principal Financial Officer (PFO) Certification
EX-32	Section 1350 Certifications

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS (UNAUDITED)

THE GORMAN-RUPP COMPANY

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2024			2023			2024			2023
Net sales	$	169,513		$	171,024		$	328,781		$	331,490
Cost of products sold		115,434			119,366			226,308			234,309
Gross profit		54,079			51,658			102,473			97,181
Selling, general and administrative expenses		24,930			24,193			49,818			47,430
Amortization expense		3,100			3,182			6,178			6,373
Operating income		26,049			24,283			46,477			43,378
Interest expense		(9,048	)		(10,485	)		(19,120	)		(20,672	)
Other income (expense), net		(6,331	)		(536	)		(6,603	)		(969	)
Income before income taxes		10,670			13,262			20,754			21,737
Provision for income taxes		2,335			2,785			4,535			4,740
Net income	$	8,335		$	10,477		$	16,219		$	16,997
Earnings per share	$	0.32		$	0.40		$	0.62		$	0.65
Average number of shares outstanding		26,220,809			26,178,248			26,210,951			26,154,196

See notes to consolidated financial statements (unaudited).

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands)	2024			2023		2024			2023
Net income	$	8,335		$	10,477	$	16,219		$	16,997
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments		(105	)		23		(1,189	)		278
Cash flow hedging activity		233			2,626		1,842			1,094
Pension and postretirement medical liability adjustments		250			233		(27	)		366
Other comprehensive income		378			2,882		626			1,738
Comprehensive income	$	8,713		$	13,359	$	16,845		$	18,735

See notes to consolidated financial statements (unaudited).

THE GORMAN-RUPP COMPANY

CONSOLIDATED BALANCE SHEETS

	(unaudited)
(Dollars in thousands)	June 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	34,245		$	30,518
Accounts receivable, net		96,952			89,625
Inventories, net		101,698			104,156
Prepaid and other		13,526			11,812
Total current assets		246,421			236,111
Property, plant and equipment, net		133,827			134,872
Other assets		22,521			24,841
Other intangible assets, net		230,632			236,813
Goodwill		257,659			257,721
Total assets	$	891,060		$	890,358
Liabilities and equity
Current liabilities:
Accounts payable	$	29,082		$	23,277
Payroll and employee related liabilities		21,689			20,172
Commissions payable		10,381			10,262
Deferred revenue and customer deposits		10,784			12,521
Current portion of long-term debt		18,500			21,875
Accrued expenses		10,332			12,569
Total current liabilities		100,768			100,676
Pension benefits		11,337			11,500
Postretirement benefits		22,840			22,786
Long-term debt, net of current portion		376,880			382,579
Other long-term liabilities		20,676			23,358
Total liabilities		532,501			540,899
Equity:
Common shares, without par value:
Authorized - 35,000,000 shares;
Outstanding - 26,227,540 shares at June 30, 2024 and 26,193,998 shares at December 31, 2023 (after deducting treasury shares of 821,256 and 953,931, respectively), at stated capital amounts		5,126			5,119
Additional paid-in capital		7,307			5,750
Retained earnings		370,437			363,527
Accumulated other comprehensive (loss)		(24,311	)		(24,937	)
Total equity		358,559			349,459
Total liabilities and equity	$	891,060		$	890,358

See notes to consolidated financial statements (unaudited).

THE GORMAN-RUPP COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
(Dollars in thousands)	2024			2023
Cash flows from operating activities:
Net income	$	16,219		$	16,997
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,089			14,158
LIFO expense		2,127			4,440
Pension expense		1,326			1,617
Stock based compensation		1,955			1,606
Contributions to pension plans		(595	)		-
Amortization of debt issuance fees		5,814			1,481
Gain on sale of property, plant, and equipment		(1,058	)		-
Other		200			30
Changes in operating assets and liabilities:
Accounts receivable, net		(7,693	)		(8,645	)
Inventories, net		(426	)		(8,959	)
Accounts payable		5,990			4,435
Commissions payable		241			142
Deferred revenue and customer deposits		(1,704	)		2,365
Income taxes		5			2,374
Accrued expenses and other		(3,812	)		2,235
Benefit obligations		719			3,580
Net cash provided by operating activities		33,397			37,856
Cash flows from investing activities:
Capital additions		(7,131	)		(13,270	)
Proceeds from sale of property, plant, and equipment		2,116			-
Other		53			367
Net cash used for investing activities		(4,962	)		(12,903	)
Cash flows from financing activities:
Cash dividends		(9,433	)		(9,148	)
Treasury share repurchases		(267	)		(1,029	)
Proceeds from bank borrowings		400,000			5,000
Payments to banks for borrowings		(413,750	)		(13,750	)
Debt issuance fees		(746	)		-
Other		(34	)		(534	)
Net cash used for financing activities		(24,230	)		(19,461	)
Effect of exchange rate changes on cash		(478	)		(102	)
Net increase in cash and cash equivalents		3,727			5,390
Cash and cash equivalents:
Beginning of period		30,518			6,783
End of period	$	34,245		$	12,173

See notes to consolidated financial statements (unaudited).

THE GORMAN-RUPP COMPANY

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

	Six Months Ended June 30, 2024
(Dollars in thousands, except	Common Shares						Additional Paid-In			Retained			Accumulated Other Comprehensive
share and per share amounts)	Shares			Dollars			Capital			Earnings			(Loss) Income			Total
Balances December 31, 2023		26,193,998		$	5,119		$	5,750		$	363,527		$	(24,937	)	$	349,459
Net income											7,884						7,884
Other comprehensive income														248			248
Stock based compensation, net		24,336			5			979			90						1,074
Treasury share repurchases		(7,348	)		(2	)		(238	)		(27	)					(267	)
Cash dividends - $0.18 per share											(4,715	)					(4,715	)
Balances March 31, 2024		26,210,986		$	5,122		$	6,491		$	366,759		$	(24,689	)	$	353,683
Net income											8,335						8,335
Other comprehensive income														378			378
Stock based compensation, net		16,554			4			816			61						881
Treasury share repurchases																	-
Cash dividends - $0.18 per share											(4,718	)					(4,718	)
Balances June 30, 2024		26,227,540		$	5,126		$	7,307		$	370,437		$	(24,311	)	$	358,559

	Six Months Ended June 30, 2023
(Dollars in thousands, except	Common Shares						Additional Paid-In			Retained			Accumulated Other Comprehensive
share and per share amounts)	Shares			Dollars			Capital			Earnings			(Loss) Income			Total
Balances December 31, 2022		26,094,865		$	5,097		$	3,912		$	346,659		$	(24,474	)	$	331,194
Net income											6,520						6,520
Other comprehensive loss														(1,144	)		(1,144	)
Stock based compensation, net		119,488			26			1			438						465
Treasury share repurchases		(36,105	)		(8	)		(889	)		(131	)					(1,028	)
Cash dividends - $0.175 per share											(4,567	)					(4,567	)
Balances March 31, 2023		26,178,248		$	5,115		$	3,024		$	348,919		$	(25,618	)	$	331,440
Net income											10,477						10,477
Other comprehensive income

SEC Form 10-Q filed by Gorman-Rupp Company