grc20230930_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 September 30, 2023

☐	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 October 30, 2023 there were 26,193,998 common shares, without par value, of The Gorman-Rupp Company outstanding.

The Gorman-Rupp Company

Three and Nine Months Ended September 30, 2023 and 2022

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income - Three months ended September 30, 2023 and 2022 - Nine months ended September 30, 2023 and 2022	3
	Consolidated Statements of Comprehensive Income - Three months ended September 30, 2023 and 2022 - Nine months ended September 30, 2023 and 2022	3
	Consolidated Balance Sheets - September 30, 2023 and December 31, 2022	4
	Consolidated Statements of Cash Flows - Nine months ended September 30, 2023 and 2022	5
	Consolidated Statements of Equity - Nine months ended September 30, 2023 and 2022	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	24

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Information	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
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 September 30,						Nine Months Ended September 30,
(Dollars in thousands, except per share amounts)	2023			2022			2023			2022
Net sales	$	167,456		$	153,792		$	498,946		$	375,026
Cost of products sold		119,322			113,229			353,631			280,727
Gross profit		48,134			40,563			145,315			94,299
Selling, general and administrative expenses		23,233			22,076			70,664			62,125
Amortization expense		3,026			3,176			9,398			4,498
Operating income		21,875			15,311			65,253			27,676
Interest expense		(10,475	)		(7,556	)		(31,147	)		(9,878	)
Other income (expense), net		(416	)		(5,323	)		(1,385	)		(7,079	)
Income before income taxes		10,984			2,432			32,721			10,719
Provision for income taxes		2,006			211			6,746			1,951
Net income	$	8,978		$	2,221		$	25,975		$	8,768
Earnings per share	$	0.34		$	0.09		$	0.99		$	0.34
Cash dividends per share	$	0.175		$	0.170		$	0.525		$	0.510
Average number of shares outstanding		26,193,656			26,094,865			26,167,494			26,088,329

See notes to consolidated financial statements (unaudited).

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2023			2022			2023			2022
Net income	$	8,978		$	2,221		$	25,975		$	8,768
Other comprehensive (loss) income, net of tax:
Cumulative translation adjustments		(1,166	)		(2,855	)		(888	)		(5,719	)
Cash flow hedging activity		1,238			-			2,332			-
Pension and postretirement medical liability adjustments		226			3,981			592			6,067
Other comprehensive (loss) income		298			1,126			2,036			348
Comprehensive income	$	9,276		$	3,347		$	28,011		$	9,116

See notes to consolidated financial statements (unaudited).

THE GORMAN-RUPP COMPANY

CONSOLIDATED BALANCE SHEETS

	(unaudited)
(Dollars in thousands)	September 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	18,189		$	6,783
Accounts receivable, net		99,385			93,059
Inventories, net		103,525			111,133
Prepaid and other		12,030			14,551
Total current assets		233,129			225,526
Property, plant and equipment, net		135,600			128,640
Other assets		25,099			11,579
Other intangible assets, net		239,959			249,361
Goodwill		257,590			257,724
Total assets	$	891,377		$	872,830
Liabilities and equity
Current liabilities:
Accounts payable	$	24,704		$	24,697
Payroll and employee related liabilities		26,268			17,132
Commissions payable		9,548			10,116
Deferred revenue and customer deposits		8,767			6,740
Current portion of long-term debt		19,688			17,500
Accrued expenses		13,471			9,028
Total current liabilities		102,446			85,213
Pension benefits		8,625			9,352
Postretirement benefits		21,996			22,413
Long-term debt, net of current portion		390,492			419,327
Other long-term liabilities		21,038			5,331
Total liabilities		544,597			541,636
Equity:
Common shares, without par value:
Authorized - 35,000,000 shares;
Outstanding - 26,193,998 shares at September 30, 2023 and 26,094,865 shares at
December 31, 2022 (after deducting treasury shares of 854,798 and 953,931, respectively), at stated capital amounts		5,118			5,097
Additional paid-in capital		4,833			3,912
Retained earnings		359,267			346,659
Accumulated other comprehensive (loss)		(22,438	)		(24,474	)
Total equity		346,780			331,194
Total liabilities and equity	$	891,377		$	872,830

See notes to consolidated financial statements (unaudited).

THE GORMAN-RUPP COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30,
(Dollars in thousands)	2023			2022
Cash flows from operating activities:
Net income	$	25,975		$	8,768
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,196			14,161
LIFO expense		6,414			9,767
Pension expense		2,426			8,963
Stock based compensation		2,335			2,107
Contributions to pension plans		(2,250	)		(2,000	)
Amortization of debt issuance fees		2,247			977
Other		1,282			-
Changes in operating assets and liabilities:
Accounts receivable, net		(6,515	)		(13,514	)
Inventories, net		656			(20,761	)
Accounts payable		230			3,437
Commissions payable		(531	)		319
Deferred revenue and customer deposits		2,053			(2,526	)
Income taxes		2,186			206
Accrued expenses and other		5,499			(4,019	)
Benefit obligations		8,456			6,623
Net cash provided by operating activities		71,659			12,508
Cash flows from investing activities:
Capital additions		(16,917	)		(11,268	)
Payment for acquisitions		-			(526,301	)
Other		608			327
Net cash used for investing activities		(16,309	)		(537,242	)
Cash flows from financing activities:
Cash dividends		(13,732	)		(13,306	)
Treasury share repurchases		(1,028	)		(918	)
Proceeds from bank borrowings		5,000			445,000
Payments to banks for borrowings		(33,125	)		(4,375	)
Debt issuance fees		-			(15,217	)
Other		(519	)		(97	)
Net cash provided by (used for) financing activities		(43,404	)		411,087
Effect of exchange rate changes on cash		(540	)		(1,259	)
Net increase (decrease) in cash and cash equivalents		11,406			(114,906	)
Cash and cash equivalents:
Beginning of period		6,783			125,194
End of period	$	18,189		$	10,288

See notes to consolidated financial statements (unaudited).

THE GORMAN-RUPP COMPANY

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

	Nine Months Ended September 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														2,882			2,882
Stock based compensation, net								1,141									1,141
Treasury share repurchases																	-
Cash dividends - $0.175 per share											(4,581	)					(4,581	)
Balances June 30, 2023		26,178,248		$	5,115		$	4,165		$	354,815		$	(22,736	)	$	341,359
Net income											8,978						8,978
Other comprehensive loss														298			298
Stock based compensation, net		15,750			3			668			58						729
Treasury share repurchases																	-
Cash dividends - $0.175 per share											(4,584	)					(4,584	)
Balances September 30, 2023		26,193,998		$	5,118		$	4,833		$	359,267		$	(22,438	)	$	346,780

	Nine Months Ended September 30, 2022
(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, 2021		26,103,661		$	5,099		$	1,838		$	353,369		$	(30,330	)	$	329,976
Net income											7,543						7,543
Other comprehensive income														387			387
Stock based compensation, net								682									682
Treasury share repurchases		(24,546	)		(5	)		(822	)		(91	)					(918	)
Cash dividends - $0.17 per share											(4,436	)					(4,436	)
Balances March 31, 2022		26,079,115		$	5,094		$	1,698		$	356,385		$	(29,943	)	$	333,234
Net income (loss)											(996	)					(996	)
Other comprehensive loss														(1,165	)		(1,165	)
Stock based compensation, net								730									730
Treasury share repurchases																	-
Cash dividends - $0.17 per share											(4,433	)					(4,433	)
Balances June 30, 2022		26,079,115		$	5,094		$	2,428		$	350,956		$	(31,108	)	$	327,370
Net income											2,221						2,221
Other comprehensive income														1,126			1,126
Stock based compensation, net		15,750			3			634			59						696
Treasury share repurchases																	-
Cash dividends - $0.17 per share											(4,437	)					(4,437	)
Balances September 30, 2022		26,094,865		$	5,097		$	3,062		$	348,799		$	(29,982	)	$	326,976

See notes to consolidated financial statements (unaudited).

SEC Form 10-Q filed by Gorman-Rupp Company