Gorman-Rupp Shares Slip On Q4 Revenue Miss, Weak Margins

  • Gorman-Rupp Co GRC reported fourth-quarter sales growth of 14.1% year-over-year to $94.16 million, missing the consensus of $98.28 million.
  • Domestic sales of $64.9 million +10.7% Y/Y and international sales of $29.3 million increased 22.6% Y/Y.
  • The company noted customer-initiated shipment delays somewhat impacted Q4 sales.
  • Q4 EPS were $0.25 compared to $0.26 last year. The company's 2021 results included an unfavorable LIFO impact of $0.08 and non-cash pension settlement charges of $0.01.
  • The gross margin contracted by 210 bps to 23.7%. The decrease was driven by a 260 bps increase in the cost of material, which included an unfavorable LIFO impact of 300 basis points.
  • The operating income was $8.23 million (-2.5% Y/Y) for the quarter, with a margin of 8.7%, down 150 bps.
  • SG&A expenses were $14.1 million (+9.9% Y/Y) and constituted 15% of net sales compared to 15.6% in 4Q20.
  • Gorman-Rupp's backlog of orders was $186 million (+64.4% Y/Y) as of December 31, 2021. Incoming orders increased 26.9% for FY21 and +33% for 4Q20.
  • "We have passed on price increases to offset inflationary pressures on material costs and wages and have leveraged our SG&A expenses as sales volumes have increased. We enter 2022 with a very healthy backlog and are well positioned to continue to deliver top-line growth," said CEO Scott King.
  • Price Action: GRC shares traded lower by 7.11% at $36.63 on the last check Friday.

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