MANSFIELD — The Board of Directors of The Gorman-Rupp Company (NYSE: GRC) has declared a quarterly cash dividend of $0.175 per share on the common stock of the Company, payable June 9, 2023, to shareholders of record May 15, 2023. This will mark the 293rd consecutive quarterly dividend paid by The Gorman-Rupp Company.
The Gorman-Rupp Company (NYSE: GRC) reported the following financial results for the first quarter ended March 31, 2023.
Net sales for the first quarter of 2023 were $160.5 million compared to net sales of $102.2 million for the first quarter of 2022, an increase of 57.1% or $58.3 million.
Domestic sales increased 65.4% or $47.4 million and international sales increased 36.7% or $10.9 million compared to the same period in 2022. Fill-Rite sales, which are primarily domestic, were $40.0 million for the first quarter of 2023.
“We continued to deliver strong organic growth with a sales increase of nearly 18% during the quarter, which contributed to our improved gross margin,” said Scott King, President and Chief Executive Officer. “Incoming orders also continued at a good pace, with total incoming orders during the quarter of $167 million our backlog remains at record levels.
“Inventory grew as planned during the quarter to support our order volume and backlog, while we expect a reduction in inventory levels during the second-half of the year. We are focused on delivering long term sustained growth and continuing to improve margins.”
First Quarter 2023 Highlights
Net sales of $160.5 million increased 57.1%, or $58.3 million, compared to the first quarter of 2022, a 17.9% increase excluding sales from Fill-Rite which was acquired in May 2022
First quarter net income was $6.5 million, or $0.25 per share, compared to net income of $7.5 million, or $0.29 per share, for the first quarter of 2022
Adjusted earnings per share1 for the first quarter of 2023 and 2022 were $0.27 and $0.29, respectively
Adjusted EBITDA1 of $28.4 million for the first quarter of 2023 increased $14.1 million, or 98.7%, from $14.3 million for the same period in 2022
Incoming orders of $167.0 million increased 49.1% when compared to the same period in 2022, an increase of 12.3% excluding Fill-Rite
As previously announced, on May 31, 2022, the Company completed its acquisition of Fill-Rite and Sotera (“Fill-Rite”), a division of Tuthill Corporation.
Excluding Fill-Rite, sales in our water markets increased 20.1% or $14.5 million in the first quarter of 2023 compared to the first quarter of 2022. Sales increased $7.7 million in the fire suppression market, $3.1 million in the municipal market, $2.1 million in the repair market, and $1.9 million in the construction market. Partially offsetting these increases was a sales decrease of $0.3 million in the agriculture market.
Excluding Fill-Rite, sales in our non-water markets increased 12.8% or $3.8 million in the first quarter of 2023 compared to the first quarter of 2022. Sales increased $3.1 million in the industrial market, $0.4 million in the petroleum market, and $0.3 million in the OEM market.
Gross profit was $45.5 million for the first quarter of 2023, resulting in gross margin of 28.4%, compared to gross profit of $25.5 million and gross margin of 25.0% for the same period in 2022. The improvement in gross margin was due primarily to leverage from increased sales volume and sales mix which includes Fill-Rite in 2023. The 340 basis point increase in gross margin was driven by a 270 basis point improvement from labor and overhead leverage due to increased sales volume and a 70 basis point improvement in cost of material. Gross margin for the first quarter of 2023 includes 40 basis points of amortization expense related to the Fill-Rite acquired customer backlog. The acquired customer backlog will be fully amortized during the second quarter of 2023.
Selling, general and administrative (“SG&A”) expenses were $23.2 million and 14.5% of net sales for the first quarter of 2023 compared to $15.9 million and 15.5% of net sales for the same period in 2022. The increase in SG&A expenses is primarily due to the inclusion of Fill-Rite. The improvement in SG&A as a percent of sales was due to favorable leverage from increased sales.
Amortization expense was $3.2 million for the first quarter of 2023 compared to $0.2 million for the same period in 2022. The increase in amortization expense was due to $3.0 million in amortization attributable to the Fill-Rite acquisition.
Operating income was $19.1 million for the first quarter of 2023, resulting in an operating margin of 11.9%, compared to operating income of $9.5 million and operating margin of 9.3% for the same period in 2022. Operating margin increased 260 basis points compared to the same period in 2022 due to improved leverage on labor, overhead, and SG&A expenses due to increased sales volumes partially offset by increased amortization expense.
Interest expense was $10.2 million for the first quarter of 2023. No interest expense was recorded in the first quarter of 2022. The interest expense was due to debt financing attributable to the Fill-Rite acquisition.
Net income was $6.5 million, or $0.25 per share, for the first quarter of 2023 compared to net income of $7.5 million, or $0.29 per share, in the first quarter of 2022. Adjusted earnings per share1 for the first quarter of 2023 were $0.27 per share compared to $0.29 per share for the first quarter of 2022.
Adjusted EBITDA1 was $28.4 million for the first quarter of 2023 compared to $14.3 million for the first quarter of 2022. Adjusted EBITDA increased from organic sales growth and improved gross margin as well as the acquisition of Fill-Rite.
The Company’s backlog of orders was $270.6 million at March 31, 2023 compared to $195.5 million at March 31, 2022 and $267.4 million at December 31, 2022. Fill-Rite added $11.1 million to the backlog at March 31, 2023 when compared to March 31, 2022. Incoming orders during the first quarter of 2023 increased 49.1% when compared to the same period in 2022, and increased 12.3% excluding Fill-Rite.
Net cash provided by operating activities for the first three months of 2023 was $18.6 million compared to $6.2 million for the same period in 2022 driven by increased earnings before depreciation, amortization, and LIFO expense, and improved cash flow from accounts receivable and accounts payable. Capital expenditures for the first three months of 2023 were $6.5 million and consisted primarily of machinery and equipment. Capital expenditures for the full-year 2023 are presently planned to be in the range of $18 – $20 million. Total debt, net of cash, decreased $6.8 million during the first three months of 2023.
About The Gorman-Rupp Company
Founded in 1933, The Gorman-Rupp Company is a leading designer, manufacturer and international marketer of pumps and pump systems for use in diverse water, wastewater, construction, dewatering, industrial, petroleum, original equipment, agriculture, fire suppression, heating, ventilating and air conditioning (HVAC), military and other liquid-handling applications.
