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Gorman-Rupp (GRC) Beats on Q4 Earnings, Sales Fall Y/Y

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Machinery company The Gorman-Rupp Company (GRC - Free Report) reported better-than-expected bottom-line results for fourth-quarter 2016. The company’s earnings, before special items came in at 24 cents per share,14.3% higher than  the Zacks Consensus Estimate of 21 cents.

Including the impact of special items, the company’s earnings were 19 cents per share in the fourth quarter and 95 cents in 2016, below the year-ago tallies of 21 cents and 96 cents, respectively.

Revenues

In the fourth quarter, Gorman-Rupp Company’s net sales totaled $94.2 million, down 4.6% year over year. The company’s domestic sales grew roughly 8.8% while international sales decreased 7.1%.

Considering the sources, the company’s sales in larger water markets grew $3 million year over year, while in non-water markets it decreased $0.7 million.  

In 2016, the company generated revenues of $382.1 million, down 5.9% from the year-ago sales of $406.2 million.

Exiting the year, the company’s backlog of orders were $98.8 million, down 15.6% from the year-ago period. The fall was due primarily to weak orders in the petroleum and fire protection markets.

Margins

In the quarter, Gorman-Rupp Company’s cost of goods sold decreased 8.5% year over year, and as a percentage of revenues came in at 75.4%, below 78.5% in the prior-year quarter. Gross margin grew 310 basis points (bps) to 24.6%. Selling, general and administrative expenses, as a percentage of revenues were 15.2% compared with 14.45% in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting the fourth quarter, Gorman-Rupp Company had cash and cash equivalents of $57.6 million, down from $63.7 million recorded at the third-quarter end. Long-term liabilities were $30.6 million compared with $30.9 million in the previous quarter.
 
In 2016, the company generated cash of $53.4 million from its operating activities. Capital spending was $6.9 million.

Outlook

For 2017, Gorman-Rupp Company anticipates gaining from healthy operating conditions in the water and wastewater infrastructure markets as well as from military growth and renewed pipeline projects. Also, revival is expected in the oil and gas markets. However, the company predicts weakness in agriculture and export markets. Capital spending is expected to be within $8−$10 million range.

 

Zacks Rank & Stocks to Consider

With a market capitalization of $819.5 million, Gorman-Rupp Company currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the machinery industry include Altra Industrial Motion Corp. , Chart Industries Inc. (GTLS - Free Report) and RBC Bearings Incorporated . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Altra Industrial Motion Corporation’s earnings estimates for 2017 have improved over the last 60 days. Average earnings surprise for the last four quarters is a positive 8.06%.
 
Chart Industries Inc. has an average positive earnings surprise of 548.51% for the last four quarters.

RBC Bearings Incorporated’s financial performance has been impressive, with an average positive earnings surprise of 1.60%, for the last four quarters. Also, earnings estimates for fiscal 2018 have been revised upward, over the last 60 days.

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