Gorman-Rupp Company (the) · NYSE:GRC
Gorman-Rupp Company (the) — The Gorman-Rupp Company — Investor Presentation (November 2022)
54 slides from Gorman-Rupp Company (the)'s investor presentation, November 2022
Slide 1: Investor Presentation
November 2022 NOVEMBER 2022 PRESENTATION INVESTOR 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 almost 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 Histo
Slide 4: Company Overview
COMPANY OVERVIEW Leading designer and manufacturer of pumps and pump systems Product diversity with significant presence in Fire Suppression, Municipal, Construction, Agriculture, Industrial, Petroleum and OEM markets Reputation for quality products and outstanding service Recognizable famil
Slide 5: 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 and niche o
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: Fill-Rite Overview
FILL-RITE OVERVIEW Brand Overview Revenue Breakdown FY 2021A Revenue: $132mm Product Mix Geographic Mix • Widely recognized as #1 fuel • Rugged chemical and transfer pump brand in the industrial fluid transfer pumps 14% 4% 8% 4% 3% industry 34% • Products include pumps and • Products include fixed a
Slide 8: Global Operations
GLOBAL OPERATIONS GORMAN-RUPP PUMPS GROUP NATIONAL PUMPS GROUP Gorman-Rupp Pumps USA Mansfield, OH National Pump Company USA www.grpumps.com Glendale, AZ; Fresno, CA; Zolfo Springs, FL; Olive Branch, MS; Gorman-Rupp of Canada Limited Lubbock, TX; Houston, TX St. Thomas, Ontario USA www.nationalpumpc
Slide 9: Market Diversity – By Design
MARKET DIVERSITY – BY DESIGN Gorman-Rupp Company Markets (includes Fill-Rite) Markets • Industrial/Chemicals & HVAC Supply (21% - 23%) Repair Parts • Fire Suppression (19% - 22%) Refined Industrial / Petroleum Chemicals & • Agriculture & Irrigation Supply (14% - 16%) HVAC Supply OEM • Construction &
Slide 10: Product Diversity
PRODUCT DIVERSITY NOVEMBER 2022 PRESENTATION 10
Slide 11: Industrial / Chemicals & HVAC Supply
INDUSTRIAL / CHEMICALS & HVAC SUPPLY (21% - 23%) Dependable pumps for manufacturing applications Pumps for moving heavy sludges, slurries and other viscous materials HVAC pump market share expanding DRIVERS: Industrial construction, expansion and remodeling NOVEMBER 2022 PRESENTATION 11
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 DRIVERS: Commercial and industrial c
Slide 13: Agriculture & Irrigation
AGRICULTURE & IRRIGATION (14% - 16%) Irrigation pumps supplied to sprinkler installation companies Strategically located branch locations across the U.S. Pumps for animal waste, pit agitation, fuel transfer and liquid fertilizer DRIVERS: Grower cash flows from farm commodity prices; bank finan
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: Storm Water & Flood Control
STORM WATER & FLOOD CONTROL Flood control pumps capable of pumping up to one million gallons per minute Permanent Canals Closure and Pumps Project completed in New Orleans in 2017 Acquisition of Morrison Pump Company in 2016 DRIVERS: Infrastructure build and re-build; natural disasters NOVEMBE
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 DRIVERS: Growth and new products in numerous commercial, medical and retail sectors; power generation
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 DRIVERS: Petroleum refinery production, storage and dis
Slide 19: Repair Parts
REPAIR PARTS Most parts ship within 24 hours Consolidated 9% - 12% Large range – 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 The Right Pump for the job! Abrasive Wear C
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) NOVEMBER 2
Slide 21: Competition
COMPETITION NOVEMBER 2022 PRESENTATION 21
Slide 22: Notable Pump Competitors
NOTABLE PUMP COMPETITORS GORMAN-RUPP MARKETS Company Fire Suppression Municipal Flood Control Construction Agriculture Industrial Petroleum OEM XYLEM (XYL) – ($5.2B; Pumps/Services $3.9B, 74%) Flygt Goulds AC Fire Pump Bell & Gossettt Godwin Pumps Flow
Slide 23: Notable Pump Competitors
NOTABLE PUMP COMPETITORS GORMAN-RUPP MARKETS Company Fire Suppression Municipal Flood Control Construction Agriculture Industrial Petroleum OEM Pentair (PNR) – ($3.8B; 100% Flow/Pumps) Hydromatic Aurora Fairbanks Nijhuis Franklin Electric (FELE) – ($1.7B; Flow/Pum
Slide 24: Notable Pump Competitors
NOTABLE PUMP COMPETITORS GORMAN-RUPP MARKETS Company Fire Suppression Municipal Flood Control Construction Agriculture Industrial Petroleum OEM Host of private companies/divisions Smith & Loveless BJM / Stancor Thompson Pumps Zoeller Pumps Vaughan Pumps
Slide 25: Financial Summary
FINANCIAL SUMMARY NOVEMBER 2022 PRESENTATION 25
Slide 26: Net Sales & Net Income
NET SALES & NET INCOME 2020 COVID-19 480 45 420 40 35 360 30 Millions of Dollars Millions of Dollars 300 (Net Income) (Sales) 25 240 20 180 15 120 10 60 5 0 0 2017 2018 2019 2020 2021 2022 Net Sales 9 mos. YTD Net Income Net Income without (Non-Cash) Settlement Loss and Impairment Charges Net Sales
Slide 27: Strong EBITDA & Free Cash Flow
STRONG EBITDA & FREE CASH FLOW 70 18% 16% 60 14% 50 12% Millions in Dollars Percent of Net Sales 40 10% 30 8% 6% 20 4% 10 2% - 0% A) 2017 2018 2019 2020 2021 2022 Adjusted EBITDA 9 mos. YTD Free Cash Flow Adjusted EBITDA, percent of net sales Adjusted EBITDA A) 2018 Free Cash Flow excludes $52.2 mil
Slide 28: Historical Capital Allocation
HISTORICAL CAPITAL ALLOCATION Return of capital to shareholders through dividends Maintenance capital ~ $15 million per year Current annualized dividend rate of $0.70 per share 90 Special dividend of $2.00 per share in 2018 80 Capital Expenditures 70 • National Pump Building Expansions • $2.4 Mi
Slide 29: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Our maintenance capital expenditures are expected to be ~$15mm per year We have a proud history of returning capital to shareholders through dividends and expect to maintain our dividend practices while achieving our leverage target We are focused on deleverag
Slide 30: Growth of Shares
GROWTH OF 100 SHARES Share growth through stock dividends and splits CAGR of 6.7% since 1968 $86,135 A) 2500 2,323 Shares 2000 1500 Number of Shares 1000 500 $2,600 100 shares 0 A) As of 9/30/22, value of $55,264 at $23.79/share and cash dividends received of $30,871. NOVEMBER 2022 PRESENTATION
Slide 31: History of Increasing Dividends
HISTORY OF INCREASING DIVIDENDS 291 Consecutive quarters of cash dividends 50 Consecutive years of increased cash dividends $0.70 $18.0 Among Top 50 U.S. Public Companies $16.0 $0.60 Current annualized rate $0.70 per share 2.9%/year of $23.79/share 9/30/22 $14.0 Annual Dividends Paid ($ Millio
Slide 32: Q3 2022 P&L
Q3 2022 P&L Sales increased 50.6% or $51.7 million (11.3% excluding Fill-Rite, which was acquired in May 2022) Adjusted EPS was $0.25 per share compared to $0.35 for Q3 2021 Results included an unfavorable LIFO impact of $0.11 and $0.08 per share in 2022 and 2021, respectively 2022 included
Slide 33: Nine Months Ended September 30, 2022 P&L
NINE MONTHS ENDED SEPTEMBER 30, 2022 P&L Sales increased 32.0% or $90.9 million (13.1% excluding Fill-Rite, which was acquired in May 2022) Adjusted EPS of $0.81 compared to $0.95 for 2021 Results included an unfavorable LIFO impact of $0.30 and $0.12 per share in 2022 and 2021, respectively
Slide 34: Balance Sheet
BALANCE SHEET Fill-Rite acquisition decreased cash, and increased debt, goodwill and intangibles, and net working capital ($ in millions) September 30, December 31, September 30, December 31, 2022 2021 2022 2021 ASSETS LIABILITIES & SHAREHOLDERS’ EQUITY Cash and cash equivalents $10.3 $125.2 Curre
Slide 35: Pillars for Growth
PILLARS FOR GROWTH NOVEMBER 2022 PRESENTATION 35
Slide 36: Pillars for Growth
PILLARS FOR GROWTH Organic International Acquisitions NOVEMBER 2022 PRESENTATION 36
Slide 37: Well Positioned for Organic Growth
WELL POSITIONED FOR ORGANIC GROWTH Robust new product development pipeline Broad network of global distributors Over two million square feet of design, manufacturing and distribution space worldwide, with capacity for growth Expanding Fill-Rite capacity in 2023 ISO Certified 9001, 14001 –
Slide 38: Organic Growth Drivers
ORGANIC GROWTH DRIVERS Aging U.S. infrastructure – U.S. Infrastructure Report Card(1) Drinking Water C- Wastewater D+ Storm Water D Infrastructure bill including investment in water, wastewater and flood control Bill needed to address estimated $2.6 trillion gap(1) in required infrastructure s
Slide 39: Product Innovation
PRODUCT INNOVATION NSF61 Drinking Water Majority of products continue to be made in the USA Certification Strong team of experienced engineers providing project-specific engineering Registered full pump including expertise and new product development the “can” Continued advancements in challen
Slide 40: Process Innovation
PROCESS INNOVATION Focus on customer facing technology with ability to research, configure and order Easy on-line access to customer specific pump specifications, user manuals and parts ordering Integration of 3D printing capabilities into new product development and factory productivity impro
Slide 41: Customer Training and Education
CUSTOMER TRAINING AND EDUCATION 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 education and testing facilities supports training of both that can distribution a
Slide 42: International Distribution Capability
INTERNATIONAL DISTRIBUTION CAPABILITY International sales represent approximately 25% of total company sales annually Proforma 2021 Proforma Total International International Sales Sales Mix (including Fill-Rite) (including Fill-Rite) Mexico / South & Central America 14% Europe 25% $77 million $66
Slide 43: Gorman-Rupp International Locations
GORMAN-RUPP INTERNATIONAL LOCATIONS Well positioned international facilities Capacity for growth DIVISION LOCATION Gorman-Rupp Canada Ontario, Canada Gorman-Rupp Africa Johannesburg, South Africa Gorman-Rupp Europe Waardenburg, The Netherlands Gorman-Rupp Belgium Namur, Belgium Patterson Pump Ir
Slide 44: Drivers of International Growth
DRIVERS OF INTERNATIONAL GROWTH Population growth and urbanization increasing infrastructure needs Industrialization in developing countries Accelerating need for water recycling and water & wastewater treatment systems Increasing industrial and agriculture needs Sanitation needs – lack of
Slide 45: History of Growth Through Acquisitions
HISTORY OF GROWTH THROUGH ACQUISITIONS Gorman-Rupp has successfully grown through acquisitions Financial strength to continue acquisitions Approach to acquisitions remains disciplined and selective Acquisitions since 2010: Year Company Locations Key Markets 2010 National Pump Company AZ, CA, T
Slide 46: Fill-Rite Aligns with Gorman-Rupp's Disciplined M&A Criteria
FILL-RITE ALIGNS WITH GORMAN-RUPP’S DISCIPLINED M&A CRITERIA Criteria Preferences Pumps or pumping related equipment and systems Fill-Rite acquisition Products that complement existing product lines Premier fuel and chemical transfer pumps Chemical / Fuels HVAC across agriculture, constructi
Slide 47: Fill-Rite Expands Portfolio of Mission-Critical Pumps and Systems
FILL-RITE EXPANDS PORTFOLIO OF MISSION-CRITICAL PUMPS AND SYSTEMS Key highlights Complements and expands Gorman-Rupp’s portfolio of products in mission-critical applications and adjacent end markets Agriculture and construction end markets set to benefit from rising demand in equipment spend,
Slide 48: Sustainability
SUSTAINABILITY Gorman-Rupp companies are committed to advancing the health, safety and wellness of our employees, customers and communities by: Making a positive impact on our communities through philanthropy and social engagement; Reducing our impact on the environment through resource conserva
Slide 49: Investment Highlights
INVESTMENT HIGHLIGHTS “We take care of our customers or someone else will” For almost 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 Histo
Slide 50: Bios
BIOS Jeffrey S. Gorman, Executive Chairman Jeff has been 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 Company in 1989. In 1978, he started working on the factory floor and
Slide 51: 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 net income, adjusted earnings per share and adjusted earnings before interest, taxes, depreciation and amortization, referred to as “adjusted EBITDA”. Adjusted
Slide 52: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net Income – GAAP basis $2.2 $8.8 $8.8 $23.3 Plus pension settlement charge 3.8 0.3 5.0 1.7 Plus one-time acquisition costs 0.1 - 5.6 - Plus amortization of step up in value of acquired inven
Slide 53: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Adjusted earnings before interest, taxes, depreciation and amortization: Reported net income – GAAP basis $2.2 $8.8 $8.8 $23.3 Plus interest expense 7.6 - 9.9 - Plus provision for income taxe
Slide 54: CLICK TO EDIT MASTER TITLE STYLE
CLICK TO EDIT MASTER TITLE STYLE NOVEMBER 2022 PRESENTATION 54
The Gorman-Rupp Company — Investor Presentation (November 2022) on 6ix