MANSFIELD -- The Gorman-Rupp Company on Thursday reported financial results for the first quarter that ended March 31.
First quarter highlights cited by the company were:
-- First quarter earnings per share were $0.28 compared to $0.37 per share for the first quarter of 2018
-- Net sales increased 0.3 percent or $0.3 million compared to the first quarter of 2018
-- Incoming orders increased 9.8 percent compared to the fourth quarter of 2018
Net sales for the first quarter of 2019 were $96.9 million compared to $96.6 million for the first quarter of 2018, an increase of 0.3 percent or $0.3 million. Domestic sales increased 5.1 percent or $3.3 million while international sales decreased 9.4 percent or $3.0 million compared to the same period in 2018.
Sales in our water markets increased 4.7 percent or $3.1 million in the first quarter of 2019 compared to the first quarter of 2018. Sales in the municipal market increased $4.7 million driven primarily by infrastructure needs domestically and sales in the construction market increased $2.4 million due primarily to sales to rental market customers.
These increases were partially offset by decreased sales in the fire protection market of $2.4 million driven primarily by softness in international markets and adverse weather domestically. In addition, sales in the agriculture market decreased $1.3 million and sales of repair parts decreased $0.3 million.
Sales decreased 8.8 percent or $2.8 million in our non-water markets during the first quarter of 2019 compared to the first quarter of 2018. Sales in the petroleum and industrial markets decreased a combined $1.5 million and sales in the OEM market decreased $1.3 million.
International sales were $29.2 million in the first quarter of 2019 compared to $32.2 million in the same period last year and represented 30 percent and 33 percent of total sales for the company, respectively.
International sales decreased most notably in the fire protection market driven primarily by softness in the oil and gas industry and in the petroleum market.
Gross profit was $23.3 million for the first quarter of 2019, resulting in gross margin of 24.1 percent, compared to gross profit of $26.2 million and gross margin of 27.1 percent for the same period in 2018.
Gross margin decreased 300 basis points as a result of material cost increases due to inflation, tariffs and higher freight costs, which began to occur in the second half of 2018.
Although material costs have not increased significantly from the fourth quarter of 2018, the company did not leverage labor and overhead costs as it was able to do during 2018 on higher sales due to only a modest sales increase in the first quarter of 2019. Selling price increases implemented at the beginning of this year were not fully realized during the first quarter of 2019 due to shipping of 2018 backlog.
Selling, general and administrative expenses were $14.4 million and 14.8 percent of net sales for the first quarter of 2019 as compared to $14.4 million and 14.9 percent of net sales for the same period in 2018.
Operating income was $9.0 million, resulting in operating margin of 9.2 percent for the first quarter of 2019, compared to operating income of $11.9 million and operating margin of 12.3 percent for the same period in 2018. Operating margin decreased 310 basis points due principally to material cost increases resulting from inflation, tariffs, and higher freight costs.
Net income was $7.2 million for the first quarter of 2019 compared to $9.6 million in the first quarter of 2018, and earnings per share were $0.28 and $0.37 for the respective periods.
The company’s backlog of orders was $120.8 million at March 31, 2019 compared to $127.3 million at March 31, 2018 and $113.7 million at December 31, 2018. Incoming orders decreased 5.2 percent compared to the same period in 2018 while increasing 9.8 percent compared to the fourth quarter of 2018. The increase in orders in the first quarter of 2019 compared to the fourth quarter of 2018 included increases in most of the markets the Company serves, most notably in the municipal market.
Capital expenditures for the quarter ended March 31, 2019 were $2.1 million and consisted primarily of machinery and equipment. Capital expenditures for the full-year 2019 are presently planned to be in the range of $15-$20 million and are expected to be financed through internally generated funds.
Jeffrey S. Gorman, president and CEO, said, “Material cost inflation negatively affected our results as shipments during the first quarter of 2019 largely included backlog from 2018 prior to our price increases taking effect. We do expect improvement in our margins going forward as our recent price increases are realized, and we will continue to closely monitor material costs and pricing. Overall business conditions remain solid. We are encouraged by the 10 percent increase in incoming orders during the first quarter of 2019, as well as the increase in backlog.”
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 protection, heating, ventilating and air conditioning (HVAC), military and other liquid-handling applications.