On July 26, 2024, Gorman-Rupp Co (GRC, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Gorman-Rupp Co designs, manufactures, and globally sells pumps and pump systems for various applications, generating the majority of its revenue from the United States.
Quarterly Performance Overview
Gorman-Rupp Co reported net sales of $169.5 million for Q2 2024, a slight decrease of 0.9% compared to $171.0 million in Q2 2023. This figure fell short of the analyst estimate of $176.22 million. The decline in sales was attributed to a decrease in volume, partially offset by pricing increases implemented in Q1 2024.
Despite the revenue miss, the company reported adjusted earnings per share (EPS) of $0.54, surpassing the analyst estimate of $0.44 and the previous year's adjusted EPS of $0.41. The reported net income was $8.3 million, or $0.32 per share, compared to $10.5 million, or $0.40 per share, in Q2 2023.
Key Financial Metrics
Gross profit for Q2 2024 was $54.1 million, with a gross margin of 31.9%, up from $51.7 million and a gross margin of 30.2% in Q2 2023. The improvement in gross margin was driven by a 280 basis point improvement in the cost of materials and the realization of selling price increases, partially offset by higher labor and overhead expenses.
Operating income for the quarter was $26.0 million, resulting in an operating margin of 15.4%, compared to $24.3 million and an operating margin of 14.2% in the same period last year. The increase in operating margin was primarily due to improved cost of materials.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $169.5 million | $171.0 million |
| Gross Profit | $54.1 million | $51.7 million |
| Operating Income | $26.0 million | $24.3 million |
| Net Income | $8.3 million | $10.5 million |
| Adjusted EPS | $0.54 | $0.41 |
Challenges and Achievements
The company faced challenges in the fire suppression market, with sales decreasing by $8.0 million due to backlog normalization. Additionally, sales in the agriculture, industrial, and construction markets saw declines. However, these were offset by increases in the municipal, OEM, repair, and petroleum markets.
Gorman-Rupp Co's refinancing efforts on May 31, 2024, led to a reduction in interest expenses from $10.5 million in Q2 2023 to $9.0 million in Q2 2024. The refinancing is expected to yield significant interest savings moving forward.
"Incoming orders have continued at a solid pace and on a year-to-date basis are up over 6% compared to the first half of last year, resulting in an increase in backlog since the end of 2023. In addition, our pricing strategies contributed to improved gross margin and increased adjusted earnings," commented Scott A. King, President and CEO.
Year-to-Date Highlights
For the first six months of 2024, net sales were $328.8 million, a slight decrease from $331.5 million in the same period of 2023. Gross profit for the first half of 2024 was $102.5 million, with a gross margin of 31.2%, compared to $97.2 million and a gross margin of 29.3% in the first half of 2023.
Operating income for the first six months of 2024 was $46.5 million, resulting in an operating margin of 14.1%, compared to $43.4 million and an operating margin of 13.1% in the same period last year. Net income for the first half of 2024 was $16.2 million, or $0.62 per share, compared to $17.0 million, or $0.65 per share, in the first half of 2023.
Conclusion
Gorman-Rupp Co's Q2 2024 results highlight the company's ability to navigate market challenges while achieving significant improvements in gross and operating margins. The company's strategic pricing and refinancing efforts have positively impacted its financial performance, positioning it well for future growth.
For more detailed insights and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Gorman-Rupp Co for further details.
