MANSFIELD — The Board of Directors of The Gorman-Rupp Company (NYSE: GRC) has declared a quarterly cash dividend of $0.17 per share on the common stock of the Company, payable Sept. 9, 2022, to shareholders of record Aug. 15, 2022.

This will mark the 290th consecutive quarterly dividend paid by The Gorman-Rupp Company.

“We are extremely pleased to have completed the acquisition of Fill-Rite, and I am grateful for the successful work of the Gorman-Rupp and Fill-Rite teams to integrate the business,” said Scott A. King, President and CEO.

“We are also pleased to report year-over-year double-digit organic revenue and adjusted EBIDTA growth. While global supply chain challenges are likely to persist in the near-term, we expect to continue to navigate these challenges well.

“We remain optimistic about our outlook due to strong incoming levels across all markets, high quality backlog, and continued pricing action to mitigate inflationary pressures,” King said. “We will continue to focus on the integration and growth of the Fill-Rite business, as well as executing our strategic initiatives to drive long-term profitable growth.”

In addition, The Gorman-Rupp Company also reported financial results for the second quarter and six months ended June 30, 2022.

Second Quarter 2022 Highlights

Completed acquisition of Fill-Rite

Net sales increased 28.0% or $26.1 million compared to the second quarter of 2021, a 13.4% increase excluding Fill-Rite

Second quarter net loss was ($1.0) million, or ($0.04) per share compared to net income of $7.1 million or $0.27 per share for the second quarter of 2021

Adjusted earnings per share1 for the second quarter of 2022 and 2021 were $0.27 and $0.32, respectively

Earnings included an unfavorable LIFO impact of $0.13 per share in 2022 compared to $0.02 per share in 2021

Adjusted EBITDA1 for the second quarter of 2022 increased 13.2% to $15.4 million compared to $13.6 million for the same period in 2021

Backlog increased to $264.7 million as of June 30, 2022, increasing $69.2 million during the second quarter including $14.7 million from Fill-Rite

On May 31, 2022, the Company completed its previously announced acquisition of Fill-Rite and Sotera (“Fill-Rite”), a division of Tuthill Corporation, for $526.3 million after adjusting for working capital. When adjusted for approximately $80.0 million in expected tax benefits, the net transaction value is approximately $446.3 million. The Company funded the transaction with cash-on-hand and new debt. The Company entered into senior secured credit facilities comprised of a $350.0 million term loan and a $100.0 million revolving credit facility, as well as an unsecured senior subordinated term loan in the amount of $90.0 million.

Net sales for the second quarter of 2022 were $119.1 million compared to net sales of $93.0 million for the second quarter of 2021, an increase of 28.0% or $26.1 million. Domestic sales increased 32.4% or $20.9 million and international sales increased 18.1% or $5.2 million compared to the same period in 2021. Fill-Rite sales, which are primarily domestic, were $13.6 million from the acquisition date of May 31, 2022 to June 30, 2022.

Excluding Fill-Rite, sales in our water markets increased 16.7% or $10.7 million in the second quarter of 2022 compared to the second quarter of 2021. Sales increased $5.2 million in the municipal market, $2.8 million in the fire protection market, $1.8 million in the construction market, and $1.4 million in the repair market. Partially offsetting these increases was a sales decrease of $0.5 million in the agriculture market.

Excluding Fill-Rite, sales in our non-water markets increased 6.2% or $1.8 million in the second quarter of 2022 compared to the second quarter of 2021. Sales increased $2.8 million in the industrial market and $1.3 million in the OEM market. Partially offsetting these increases was a sales decrease of $2.3 million in the petroleum market primarily due to timing.

Gross profit was $28.2 million for the second quarter of 2022, resulting in gross margin of 23.7%, compared to gross profit of $24.7 million and gross margin of 26.5% for the same period in 2021.

The 280 basis point decrease in gross margin was driven by a 500 basis point increase in cost of material, which included an unfavorable LIFO impact of 290 basis points, an unfavorable impact of 120 basis points related to Fill-Rite inventory recorded at fair value and recognized during the period, and an unfavorable impact of 20 basis points related to the amortization of acquired Fill-Rite customer backlog.

The full amount of the step-up to record Fill-Rite inventory at fair value was recognized during the period and will not recur, while the Fill-Rite customer backlog will be amortized within the next year. The decrease in gross margin was partially offset by a 220 basis point improvement from labor and overhead leverage due to increased sales volume.

Selling, general and administrative (“SG&A”) expenses were $24.1 million for the second quarter of 2022, which included $6.9 million of one-time acquisition costs. Excluding acquisition costs, SG&A expenses were $17.2 million and 14.5% of net sales for the second quarter of 2022 compared to $13.9 million and 14.9% of net sales for the same period in 2021. The decrease in SG&A expenses as a percentage of sales, excluding acquisition costs, was due to increased sales volume.

Amortization expense was $1.2 million for the second quarter of 2022 compared to $0.2 million for the same period in 2021. The increase in amortization expense was due to $1.0 million in amortization from the acquisition date of May 31, 2022 to June 30, 2022 related to the Fill-Rite acquisition.

Operating income was $2.9 million for the second quarter of 2022, which included $6.9 million in one-time acquisition costs, $1.4 million of inventory step up amortization, and $0.2 million of acquired customer backlog amortization.

Excluding acquisition costs, inventory step up and backlog amortization, operating income was $11.4 million for the second quarter of 2022, resulting in an operating margin of 9.6%, compared to operating income of $10.6 million and operating margin of 11.4% for the same period in 2021.

Excluding acquisition costs, inventory step up and backlog amortization, operating margin decreased 180 basis points primarily as a result of an unfavorable LIFO impact.

Interest expense was $2.3 million for the second quarter of 2022. No interest expense was recorded in the second quarter of 2021.

Other income (expense), net was $1.8 million of expense for the second quarter of 2022 compared to expense of $1.7 million for the same period in 2021.

Net loss was ($1.0) million, or ($0.04) per share, for the second quarter of 2022 compared to net income of $7.1 million in the second quarter of 2021, or $0.27 per share. Adjusted earnings per share for the second quarter of 2022 were $0.27 per share compared to $0.32 per share for the second quarter of 2021.

Earnings per share for the second quarter of 2022 included an unfavorable LIFO impact of $0.13 per share compared to an unfavorable LIFO impact of $0.02 per share in the second quarter of 2021.

Adjusted EBITDA was $15.4 million for the second quarter of 2022 compared to $13.6 million for the second quarter of 2021. The increase in adjusted EBITDA for the second quarter of 2022 compared to 2021 was primarily related to the acquisition of Fill-Rite which contributed $3.1 million offset by an increase in the unfavorable impact of LIFO of $3.6 million.

Year to date 2022 Highlights

Net sales for the first six months of 2022 were $221.2 million compared to net sales of $182.0 million for the first six months of 2021, an increase of 21.5% or $39.2 million. Domestic sales increased 24.1% or $30.7 million and international sales increased 15.5% or $8.5 million compared to the same period in 2021. Fill-Rite sales, which are primarily domestic, were $13.6 million from the acquisition date of May 31, 2022 to June 30, 2022.

Excluding Fill-Rite, sales in our water markets increased 14.1% or $18.1 million in the first six months of 2022 compared to the first six months of 2021. Sales increased $8.6 million in the fire market, $4.1 million in the construction market, and $3.0 million in both the municipal and repair markets. Partially offsetting these increases was a decrease of $0.6 million in the agriculture market.

Excluding Fill-Rite, sales in our non-water markets increased 14.1% or $7.5 million in the first six months of 2022 compared to the first six months of 2021. Sales increased $6.4 million in the industrial market and $3.1 million in the OEM market. Partially offsetting these increases was a decrease of $2.0 million in the petroleum market.

Gross profit was $53.7 million for the first six months of 2022, resulting in gross margin of 24.3%, compared to gross profit of $47.7 million and gross margin of 26.2% for the same period in 2021.

The 190 basis point decrease in gross margin was driven by a 360 basis point increase in cost of material, which included an unfavorable LIFO impact of 200 basis points, an unfavorable impact of 60 basis points related to Fill-Rite inventory recorded at fair value and recognized during the period, and an unfavorable impact of 10 basis points related to the amortization of acquired Fill-Rite customer backlog.

The full amount of the step-up to record Fill-Rite inventory at fair value was recognized during the period and will not recur, while the Fill-Rite customer backlog will be amortized within the next year. The decrease in gross margin was partially offset by a 170 basis point improvement from labor and overhead leverage due to increased sales volume.

Selling, general and administrative (“SG&A”) expenses were $39.9 million for the first six months of 2022, which included $6.9 million of one-time acquisition costs. Excluding acquisition costs, SG&A expenses were $33.0 million and 14.9% of net sales for the second quarter of 2022 compared to $27.8 million and 15.3% of net sales for the same period in 2021. The decrease in SG&A expenses as a percentage of sales, excluding acquisition costs, is due to increased sales volume.

Amortization expense was $1.4 million for the first six months of 2022 compared to $0.4 million for the same period in 2021. The increase in amortization expense was due to $1.0 million in amortization attributable to the Fill-Rite acquisition.

Operating income was $12.4 million for the first six months of 2022, which included $6.9 million in one-time acquisition costs, $1.4 million of inventory step up amortization, and $0.2 million of acquired customer backlog amortization.

Excluding acquisition costs, inventory step up and backlog amortization, operating income was $20.9 million for the second quarter of 2022, resulting in an operating margin of 9.4%, compared to operating income of $19.6 million and operating margin of 10.8% for the same period in 2021.

Excluding acquisition costs, inventory step up and backlog amortization, operating margin decreased 140 basis points primarily as a result of an unfavorable LIFO impact.

Interest expense was $2.3 million for the first six months of 2022. No interest expense was recorded for the first six months of 2021.

Other income (expense), net was $1.8 million of expense for the first six months of 2022 compared to expense of $1.4 million for the same period in 2021.

Net income was $6.5 million, or $0.25 per share, for the first six months of 2022 compared to $14.5 million for the first six months of 2021, or $0.56 per share. Adjusted earnings per share for the first six months of 2022 were $0.56 per share compared to $0.61 per share for the first six months of 2021. Earnings per share for the first six months of 2022 included an unfavorable LIFO impact of $0.18 per share compared to an unfavorable LIFO impact of $0.04 per share for the first six months of 2021.

Adjusted EBITDA was $27.9 million for the first six months of 2022 compared to $25.9 million for the first six months of 2021. The increase in adjusted EBITDA in 2022 compared to 2021 was primarily related to the acquisition of Fill-Rite which contributed $3.1 million offset by an increase in the unfavorable impact of LIFO of $4.7 million.

The Company’s backlog of orders was $264.7 million at June 30, 2022 compared to $153.0 million at June 30, 2021 and $186.0 million at December 31, 2021. Fill-Rite added $14.7 million to the backlog at June 30, 2022. Incoming orders increased 28.5% for the first six months of 2022 compared to the same period in 2021, and 22.7% excluding Fill-Rite.

Incoming orders during the second quarter of 2022 increased 44.5% when compared to the same period last year, and 33.7% excluding Fill-Rite.

The increase in backlog for the first six months of 2022 was primarily driven by strong incoming orders during the second quarter, large municipal orders which are longer term in nature, and the acquisition of Fill-Rite. The backlog aging has remained consistent with historical levels.

Capital expenditures for the first six months of 2022 were $8.4 million and consisted primarily of machinery and equipment and building improvements. Capital expenditures for the full-year 2022 are presently planned to be in the range of $15-$20 million.

1 See “Non-GAAP Information” and related reconciliation page.

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.