Gorman-rupp Company (the) · NYSE:GRC
Gorman-rupp Company (the) — The Gorman-Rupp Company — Q3 2024 Earnings Presentation
52 slides from Gorman-rupp Company (the)'s earnings presentation, October 2024
Slide 1: Investor Presentation October 2024
INVESTOR PRESENTATION October 2024 OCTOBER OCTOBER2024 2024PRESENTATION PRESENTATION
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, The Gorman-Rupp Company provides the following cautionary statement: This presentation contains various forward-looking statements based on assumptions concerning The G
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS “We take care of our customers or someone else will” For over 90 years now, this philosophy has created a competitive advantage by building a strong reputation for quality products and service Well suited to handle current leverage and adverse economic conditions Strong History
Slide 4: Industry Overview
INDUSTRY OVERVIEW Pumps touch our daily lives: drinking water, wastewater, sewage, irrigation, appliance cooling, transportation, fuel, industrial products, chemicals, fire suppression, construction, HVAC Many specialized pumps – due to many specialized applications Very fragmented industry wi
Slide 5: Company Overview
COMPANY OVERVIEW Leading designer and manufacturer of pumps and pump systems Product diversity with significant presence in Fire Suppression, Industrial, Agriculture, Construction, Municipal, Petroleum and OEM markets Reputation for quality products and outstanding service Recognizable famil
Slide 6: Company History
COMPANY HISTORY 1933 - Company founded with $1,500 initial – and only – capital investment 1956 - First international expansion – established Canadian manufacturing facility 1968 - Publicly listed (American Stock Exchange NYSE MKT NYSE in 2017) 1988 - Acquired Patterson Pump Company, manufacture
Slide 7: Global Operations
GLOBAL OPERATIONS Mission Statement “To provide a quality product, competitively priced, delivered on time, backed by reliable service, at a profit that provides an equitable return to our shareholders, as well as providing our employees with competitive wages and benefits.” - J.C. Gorman and Herb R
Slide 8: Operating Model
OPERATING MODEL Treasury Quality products and Strategic Planning Corporate strong reputations Legal Acquisitions Insurance / Risk Management Customer focus – Capital Allocation External Reporting & taking care of Information Technology Compliance customers Employee Benefits I
Slide 9: Product Diversity
PRODUCT DIVERSITY OCTOBER 2024 PRESENTATION 9
Slide 10: Market Diversity – By Design
MARKET DIVERSITY – BY DESIGN Gorman-Rupp Company Markets MARKETS • Industrial/Chemicals & HVAC Supply (21% - 23%) • Fire Suppression (19% - 22%) Refined Repair Parts Industrial / • Agriculture & Irrigation Supply (14% - 16%) Petroleum Chemicals & HVAC Supply • Construction & Dewatering (11% - 13%) O
Slide 11: Industrial / Chemicals & HVAC Supply
INDUSTRIAL / CHEMICALS & HVAC SUPPLY (21% - 23%) Dependable pumps for manufacturing applications Pumps for moving waste streams, chemicals, viscous materials, and heating/cooling fluids HVAC pump market share expanding MARKET DRIVERS: Industrial construction, expansion and remodeling OCTOBER 2
Slide 12: Fire Suppression
FIRE SUPPRESSION (19% - 22%) Booster pumps for sprinkler systems in large commercial structures Fire pumps are UL/FM Global approved and an industry standard Manufacturing facility in Ireland for increased capacity Domestic and international market leader MARKET DRIVERS: Commercial and indus
Slide 13: Agriculture & Irrigation
AGRICULTURE & IRRIGATION (14% - 16%) Irrigation pumps - strategically located branch locations across the U.S. Pumps for fuel transfer, animal waste, pit agitation, and liquid fertilizer MARKET DRIVERS: Grower cash flows from farm commodity prices and weather conditions OCTOBER 2024 PRESENTATION
Slide 14: Construction & Dewatering
CONSTRUCTION & DEWATERING (11% - 13%) Self-priming and vacuum prime-assisted centrifugal pumps for dewatering foundations, quarries, ditches and streams Diaphragm pumps to remove mud and sand-laden water at construction sites Rotory vane fuel transfer pumps, meters, and accessories for contrac
Slide 15: Municipal Water & Wastewater
MUNICIPAL WATER & WASTEWATER (10% - 12%) Pumps and wastewater stations Pre-engineered turn-key systems Custom design capabilities, above and below ground installation Booster pumps and deep-well line shaft pumps provide clean drinking water Municipal water and sewer funding is typically se
Slide 16: Large Custom Municipal Pumps
LARGE CUSTOM MUNICIPAL PUMPS Flood control pumps capable of pumping up to one million gallons per minute Numerous coastal flood protection installments Storm water management Wetland restoration MARKET DRIVERS: Infrastructure build and re-build; natural disasters OCTOBER 2024 PRESENTATION 16
Slide 17: OEM
OEM (6% - 8%) OEM Pump supplier to a variety of manufacturers Range of applications from transportation, appliances, food processing, chemical processing and electronics Military applications MARKET DRIVERS: Growth and new products in numerous commercial, medical and retail sectors; power gene
Slide 18: Refined Petroleum
REFINED PETROLEUM (2% - 4%) Leader in aircraft refueler market Refinery and pipeline applications Vertical turbine pumps for barge loading and unloading American Petroleum Institute certified pumps Safe bulk handling of volatile fuels MARKET DRIVERS: Petroleum refinery production, storage
Slide 19: Repair Parts
REPAIR PARTS Most parts ship within 24 hours Consolidated 9% - 12% Large range by market and application – from 30% for Construction/Industrial to minimal for Fire Suppression Approximately 20% adjusted for markets with minimal repairs HOW LONG DO PUMPS LAST? Many Variables by Application Th
Slide 20: Divisions / Markets
DIVISIONS / MARKETS End Markets Industrial/Chemicals & HVAC Supply Fire Suppression Agriculture & Irrigation Supply Construction & Dewatering Municipal Water, Wastewater & Flood Control Refined Petroleum Original Equipment Manufacturer (OEM) OCTOBER
Slide 21: International Distribution Capability
INTERNATIONAL DISTRIBUTION CAPABILITY International sales represent approximately 25% of total company sales annually 2023 Total International International Sales Sales Mix Mexico / South & Central America 19% Europe 28% $89 million $72 million Canada 23% Exported From USA Direct From Locations In
Slide 22: Competition
COMPETITION OCTOBER 2024 PRESENTATION 22
Slide 23: Notable Pump Competitors
NOTABLE PUMP COMPETITORS GORMAN-RUPP MARKETS Company Fire Suppression Municipal Flood Control Construction Agriculture Industrial Petroleum OEM XYLEM (XYL) – ($7.4B; Pumps/Services $4.8B, 65%) Flygt Goulds AC Fire Pump Bell & Gossettt Godwin Pumps Flow
Slide 24: Notable Pump Competitors
NOTABLE PUMP COMPETITORS GORMAN-RUPP MARKETS Company Fire Suppression Municipal Flood Control Construction Agriculture Industrial Petroleum OEM Pentair (PNR) – ($4.1B; 100% Flow/Pumps) Hydromatic Aurora Fairbanks Nijhuis Franklin Electric (FELE) – ($2.1B; Flow/Pum
Slide 25: Notable Pump Competitors
NOTABLE PUMP COMPETITORS GORMAN-RUPP MARKETS Company Fire Suppression Municipal Flood Control Construction Agriculture Industrial Petroleum OEM Hundreds of private companies/divisions Smith & Loveless Industrial Flow Solutions Thompson Pumps Zoeller Pumps Vaugha
Slide 26: Financial Summary
FINANCIAL SUMMARY OCTOBER 2024 PRESENTATION 26
Slide 27: Net Sales & Adjusted EPS
NET SALES & ADJUSTED EPS $180 $0.60 $160 $0.50 $140 $120 $0.40 $100 Millions of Dollars (Adjusted EPS) $0.30 Dollars (Sales) $80 $60 $0.20 $40 $0.10 $20 $0 $0.00 Q1 Q2 Q3 Q4* Q1 Q2 Q3 Q4 Q1 Q2 Q3 2022 2023 2024 See appendix for non-GAAP reconciliations. Net Sales Adjusted EPS * Unusually high LIFO e
Slide 28: Strong Adjusted EBITDA
STRONG ADJUSTED EBITDA $40 25.0% $35 20.0% $30 Millions in Dollars $25 15.0% % of Sales $20 10.0% $15 $10 5.0% $5 $0 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2022 2023 2024 Adjusted EBITDA EBITDA % of Sales See appendix for non-GAAP reconciliations. OCTOBER 2024 PRESENTATION 28
Slide 29: Incoming & Backlog Trend
INCOMING & BACKLOG TREND Backlog Total Incoming Orders $300 $250 $200 Millions $150 $100 $50 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2022 2023 2024 Amounts include Fill-Rite as of June 2022. OCTOBER 2024 PRESENTATION 29
Slide 30: Leverage Ratio
LEVERAGE RATIO Fill-Rite Acquisition 5.0 4.9 (Total debt net of excess cash / Adjusted EBITDA 4.7 4.5 4.4 4.2 Total Leverage Ratio 4.0 3.8 3.5 3.5 3.3 3.3 3.0 3.1 2.9 2.5 2.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2022 2023 2024 OCTOBER 2024 PRESENTATION 30
Slide 31: Debt Refinancing
DEBT REFINANCING September 30, 2024 March 31, 2024 (in millions) Balance Terms Balance Terms Senior Term Loan $355.4 Due May 2029, SOFR+2.25% $319.4 Due May 2027, SOFR+2.25% Credit Facility - Due May 2029 - Due May 2027 6.40% Notes 30.0 Due May 2031, 6.4% - Subordinated Credit Facility - 90.0 Due De
Slide 32: Capital Allocation
CAPITAL ALLOCATION Historical Current Priorities Our capital expenditures are expected to be ~$20mm per year We expect to maintain our dividend practices while achieving our leverage target Continue to focus on deleveraging Leverage as of September 30, 2024 was 2.9 Once we delever, acquisi
Slide 33: History of Increasing Dividends
HISTORY OF INCREASING DIVIDENDS 299 Consecutive quarters of cash dividends 52 Consecutive years of increased cash dividends $0.70 $20.0 Among Top 50 U.S. Public Companies $18.0 $0.60 Current annualized rate $0.74 per share $16.0 1.8% yield as of 9/30/24 Annual Dividends Paid ($ Millions) $0.50
Slide 34: Q3 2024 P&L
Q3 2024 P&L Net sales of $168.2 million increased 0.4%, or $0.7 million, compared to the third quarter of 2023 Third quarter net income was $12.9 million, or $0.49 per share, compared to a net income of $9.0 million, or $0.34 per share, for the third quarter of 2023. Gross margin improved 260
Slide 35: Nine Months Ended September 30, 2024 P&L
NINE MONTHS ENDED SEPTEMBER 30, 2024 P&L Net sales of $496.9 million decreased 0.4%, or $2.0 million, compared to 2023 Net income was $29.1 million, or $1.11 per share, compared to net income of $26.0 million, or $0.99 per share, in 2023 o Adjusted earnings per share1 for 2024 and 2023 were $1.3
Slide 36: Balance Sheet
BALANCE SHEET Total debt, net of cash, decreased $37.6 million during the first nine months of 2024 ($ in millions) September 30, December 31, September 30, December 31, 2024 2023 2024 2023 ASSETS LIABILITIES & SHAREHOLDERS’ EQUITY Cash and cash equivalents $39.7 $30.5 Current portion of long-term
Slide 37: Strategic Pillars
STRATEGIC PILLARS OCTOBER 2024 PRESENTATION 37
Slide 38: Pillars for Growth
PILLARS FOR GROWTH “We take care of our customers or someone else will” High-Performing Operational Organic Growth Acquisitions Culture Excellence • Focus on customers • Expand market share • High quality products • Pumps, pumping related equipment • Profit sharing • Benefit from • Product availabil
Slide 39: High-Performing Culture
HIGH-PERFORMING CULTURE High- Performing Culture Employees empowered to take care of customers Organic Growth Acquisitions Profit sharing at all levels of the organization drives owner like behavior Operational Excellence Employee development and training results in promote-from-within culture
Slide 40: Expand Market Share
EXPAND MARKET SHARE Organic Growth High value of retained customers – service, repairs and replacements Operational Excellence High Performing Culture Well positioned for infrastructure opportunities: Acquisitions Replacement/upgrades to aging U.S. infrastructure Infrastructure bill investme
Slide 41: New Product Development
NEW PRODUCT DEVELOPMENT Organic Growth Industry leading team of experienced engineers providing solutions to complex Operational High Excellence Performing problems through project-specific engineering and new product development Culture Acquisitions New products focused on: Continued advancem
Slide 42: Customer Training and Education
CUSTOMER TRAINING AND EDUCATION Organic Growth Operational High Excellence Performing Culture Acquisitions Customer visits Increased use and plant tours of technology are part of sales to deliver process virtual training Long history of In-house Mobile training product training and equipment educati
Slide 43: International Growth
INTERNATIONAL GROWTH Organic Growth Well positioned international facilities provide for local customization Operational Excellence High Performing Culture Capacity for growth-leverage existing GRC footprint Acquisitions Gorman-Rupp Canada Gorman-Rupp Africa Gorman-Rupp Europe Gorman-Rupp Belgiu
Slide 44: Operational Excellence
OPERATIONAL EXCELLENCE Operational Excellence High quality products – designed, engineered, manufactured, and tested Acquisitions Organic Growth We hold #1 market share positions in many of the markets where we operate High- Performing Culture Well established and knowledgeable distribution ne
Slide 45: History of Growth Through Acquisitions
HISTORY OF GROWTH THROUGH ACQUISITIONS Acquisitions Gorman-Rupp has successfully grown through acquisitions Operational High- Performing Excellence Culture Approach to acquisitions remains disciplined and selective Organic Growth Acquisitions since 2010: Year Company Locations Key Markets 2010 N
Slide 46: Disciplined Acquisition Criteria
DISCIPLINED ACQUISITION CRITERIA Acquisitions Criteria Preferences Operational High- Excellence Performing Pumps, pumping related equipment and systems that complement Culture Products Organic existing product lines Growth Chemical / Fuels HVAC Municipal OEM Markets Alternative Energy
Slide 47: Investment Highlights
INVESTMENT HIGHLIGHTS “We take care of our customers or someone else will” For over 90 years now, this philosophy has created a competitive advantage by building a strong reputation for quality products and service Well suited to handle current leverage and adverse economic conditions Strong History
Slide 48: Bios
BIOS Jeffrey S. Gorman, Executive Chairman Jeff was elected Executive Chairman in January 2022 after previously serving as Chairman of the Board since 2019. He previously served as CEO from 1998 to 2021 and President from 1998 to 2020. He was elected to the Board of Directors for The Gorman-Rupp Com
Slide 49: Appendix: Non-GAAP Measures
APPENDIX The Gorman-Rupp Company Non-GAAP Measures This presentation includes certain non-GAAP financial data and measures such as adjusted earnings, adjusted earnings per share, and adjusted earnings before interest, taxes, depreciation and amortization, referred to as “adjusted EBITDA”. Adjusted e
Slide 50: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Three months ended Nine months ended September 30, September 30, 2024 2023 2024 2023 Net Income – GAAP basis $12.9 $9.0 $29.1 $26.0 Amortization of acquired customer backlog - - - 0.8 Write-off of unamortized deferred debt financing fees - - 3.5 - Refinancing Costs - - 2.5 -
Slide 51: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Three months Nine months ended ended September 30, September 30, 2024 2023 2024 2023 Adjusted earnings before interest, taxes, depreciation and amortization: Reported net income – GAAP basis $12.9 $9.0 $29.1 $26.0 Interest expense 7.8 10.5 26.9 31.2 Provision for income taxes
Slide 52: OCTOBER 2024 PRESENTATION
OCTOBER 2024 PRESENTATION 52
The Gorman-Rupp Company — Q3 2024 Earnings Presentation on 6ix