The Gorman-Rupp Company (GRC) reported lower-than-expected results for fourth-quarter 2014. Earnings came in at 30 cents per share, up 7.1% from the year-ago tally of 28 cents. However, the bottom line lagged the Zacks Consensus Estimate of 32 cents by 6.3%.
For 2014, Gorman-Rupp’s earnings were $1.38 per share, up compared with $1.15 per share in 2013.
Revenues
Gorman-Rupp generated net revenue of $105 million in the quarter, reflecting an increase of 14.6% year over year, but coming in line with the Zacks Consensus Estimate of $105 million. The increase was driven by 13.7% sales growth in water end-markets and 16.9% growth in non-water end-markets.
Also, the company recorded 18.9% growth in domestic sales, while its international sales climbed 6.7% year over year.
Exiting the quarter, order backlog totaled $160.7 million versus $170 million in the preceding quarter and $182.2 million in the year-ago quarter.
For 2014, the company’s net revenue was $434.9 million, up 11% year over year.
Margins
Gorman-Rupp’s cost of sales grew 14% year over year, representing 76.2% of total revenue as against 76.6% in the year-ago quarter. Gross margin inched up 40 basis points (bps) year over year to 23.8%. Selling, general and administrative (SG&A) expenses, as a percentage of revenues, stood at 13.2%, below 14.6% recorded in the year-ago quarter.
Operating income grew 37.7% year over year to $11.2 million, while margin came in at 10.6% versus 8.9% in the year-ago comparable quarter.
Balance Sheet and Cash Flow
Exiting fourth-quarter 2014, Gorman-Rupp had cash and cash equivalents of $24.7 million versus $33.2 million at the end of the preceding quarter.
In 2014, the company spent roughly $14.1 million on buildings, and machinery and equipment.
Outlook: For 2015, Gorman-Rupp anticipates its capital expenditure within $18−$20 million. In addition, the company predicts headwinds from foreign currency translation as well as lower business from certain oil and gas end-markets.
With a market capitalization of $803 million, Gorman-Rupp currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include II-VI Incorporated (IIVI), Kadant Inc. (KAI) and The Middleby Corporation (MIDD). While II-VI Incorporated sports a Zacks Rank #1 (Strong Buy), both Kadant and Middleby Corporation carry a Zacks Rank #2 (Buy).
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