grc20240930_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, 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 October 28, 2024 there were 26,227,540 common shares, without par value, of The Gorman-Rupp Company outstanding.

The Gorman-Rupp Company

Three and Nine Months Ended September 30, 2024 and 2023

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income - Three months ended September 30, 2024 and 2023 - Nine months ended September 30, 2024 and 2023	3
	Consolidated Statements of Comprehensive Income - Three months ended September 30, 2024 and 2023 - Nine months ended September 30, 2024 and 2023	3
	Consolidated Balance Sheets - September 30, 2024 and December 31, 2023	4
	Consolidated Statements of Cash Flows - Nine months ended September 30, 2024 and 2023	5
	Consolidated Statements of Equity - Nine months ended September 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	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23

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)	2024			2023			2024			2023
Net sales	$	168,182		$	167,456		$	496,963		$	498,946
Cost of products sold		115,521			119,322			341,828			353,631
Gross profit		52,661			48,134			155,135			145,315
Selling, general and administrative expenses		25,675			23,233			75,494			70,664
Amortization expense		3,101			3,026			9,278			9,398
Operating income		23,885			21,875			70,363			65,253
Interest expense		(7,766	)		(10,475	)		(26,886	)		(31,147	)
Other income (expense), net		(59	)		(416	)		(6,662	)		(1,385	)
Income before income taxes		16,060			10,984			36,815			32,721
Provision for income taxes		3,141			2,006			7,677			6,746
Net income	$	12,919		$	8,978		$	29,138		$	25,975
Earnings per share	$	0.49		$	0.34		$	1.11		$	0.99
Average number of shares outstanding		26,227,540			26,193,656			26,216,521			26,167,494

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)	2024			2023			2024			2023
Net income	$	12,919		$	8,978		$	29,138		$	25,975
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments		1,866			(1,166	)		677			(888	)
Cash flow hedging activity		(2,612	)		1,238			(770	)		2,332
Pension and postretirement medical liability adjustments		255			226			228			592
Other comprehensive income (loss)		(491	)		298			135			2,036
Comprehensive income	$	12,428		$	9,276		$	29,273		$	28,011

See notes to consolidated financial statements (unaudited).

THE GORMAN-RUPP COMPANY

CONSOLIDATED BALANCE SHEETS

	(unaudited)
(Dollars in thousands)	September 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	39,701		$	30,518
Accounts receivable, net		88,350			89,625
Inventories, net		101,781			104,156
Prepaid and other		10,806			11,812
Total current assets		240,638			236,111
Property, plant and equipment, net		133,619			134,872
Other assets		23,871			24,841
Other intangible assets, net		227,536			236,813
Goodwill		257,810			257,721
Total assets	$	883,474		$	890,358
Liabilities and equity
Current liabilities:
Accounts payable	$	26,242		$	23,277
Payroll and employee related liabilities		26,914			20,172
Commissions payable		6,415			10,262
Deferred revenue and customer deposits		9,681			12,521
Current portion of long-term debt		18,500			21,875
Accrued expenses		12,763			12,569
Total current liabilities		100,515			100,676
Pension benefits		7,754			11,500
Postretirement benefits		22,717			22,786
Long-term debt, net of current portion		362,489			382,579
Other long-term liabilities		22,665			23,358
Total liabilities		516,140			540,899
Equity:
Common shares, without par value:
Authorized - 35,000,000 shares;
Outstanding - 26,227,540 shares at September 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		8,378			5,750
Retained earnings		378,632			363,527
Accumulated other comprehensive (loss)		(24,802	)		(24,937	)
Total equity		367,334			349,459
Total liabilities and equity	$	883,474		$	890,358

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)	2024			2023
Cash flows from operating activities:
Net income	$	29,138		$	25,975
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		20,973			21,196
LIFO expense		3,445			6,414
Pension expense		1,989			2,426
Stock based compensation		3,025			2,335
Contributions to pension plans		(4,510	)		(2,250	)
Amortization of debt issuance fees		6,110			2,247
Gain on sale of property, plant, and equipment		(1,021	)		-
Other		296			1,282
Changes in operating assets and liabilities:
Accounts receivable, net		1,426			(6,515	)
Inventories, net		(921	)		656
Accounts payable		2,885			230
Commissions payable		(3,875	)		(531	)
Deferred revenue and customer deposits		(2,833	)		2,053
Income taxes		670			2,186
Accrued expenses and other		(1,894	)		5,499
Benefit obligations		5,671			8,456
Net cash provided by operating activities		60,574			71,659
Cash flows from investing activities:
Capital additions		(10,309	)		(16,917	)
Proceeds from sale of property, plant, and equipment		2,278			-
Other		-			608
Net cash used for investing activities		(8,031	)		(16,309	)
Cash flows from financing activities:
Cash dividends		(14,157	)		(13,732	)
Treasury share repurchases		(267	)		(1,028	)
Proceeds from bank borrowings		400,000			5,000
Payments to banks for borrowings		(428,375	)		(33,125	)
Debt issuance fees		(746	)		-
Other		(86	)		(519	)
Net cash used for financing activities		(43,631	)		(43,404	)
Effect of exchange rate changes on cash		271			(540	)
Net increase in cash and cash equivalents		9,183			11,406
Cash and cash equivalents:
Beginning of period		30,518			6,783
End of period	$	39,701		$	18,189

See notes to consolidated financial statements (unaudited).

THE GORMAN-RUPP COMPANY

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

	Nine Months Ended September 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
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
Net income											12,919						12,919
Other comprehensive loss														(491	)		(491	)
Stock based compensation, net								1,071