Machinery company The Gorman-Rupp Company GRC delivered a positive earnings surprise of 32% for third-quarter 2017. The company’s shares reached a high of $33.50 during its trading session on Oct 27, following the release, representing 2.6% rally over the day’s opening price.
Earnings, before special items, came in at 33 cents per share, surpassing the Zacks Consensus Estimate of 25 cents. Also, the figure improved 37.5% from the year-ago tally of 24 cents.
Non-Water Markets Drive Revenues, Backlog Solid
Gorman-Rupp’s net sales in the quarter totaled $94 million, increasing 2.9% year over year. However, the top line grew roughly 4.4% after excluding the sales of the New Orleans Permanent Canal Closures & Pumps (PCCP) project.
Excluding the PCCP project, the company’s domestic sales grew 3.5% while international sales increased 6%.
Considering the sources, the company’s sales (excluding PCCP project) in larger water markets decreased 2.2% year over year while in non-water markets it increased 21.7%.
Exiting the quarter, the company’s backlog of orders were $111.4 million, up 8.4% from the year-ago quarter. Incoming orders in the quarter grew 17% year over year.
Margin Improves
The company’s margin profile improved in the quarter. Cost of goods sold dipped 1.3% year over year while as a percentage of revenues it came in at 72.1% versus 75.2% in the prior-year quarter. Gross margin increased 310 basis points (bps) to 27.9%.
Selling, general and administrative expenses, as a percentage of revenues were 15.2% compared with 14% in the year-ago quarter.
Cash Balance & Dividend Hike
Exiting the third quarter, Gorman-Rupp had cash and cash equivalents of $76 million, down from $63.7 million recorded at second-quarter end.
Concurrent with the earnings release, the company announced that its board of directors has approved an 8.7% increase in its quarterly dividend rate. The new quarterly cash dividend of 12.5 cents per share will be paid on Dec 8, to shareholders of record as on Nov 15.
Outlook
In the quarters ahead, Gorman-Rupp anticipates gaining from healthy incoming order rates and overall improving business conditions.
Gorman-Rupp Company (The) Price and Consensus
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