Gorman-Rupp Company (the) · NYSE:GRC
Gorman-Rupp Company (the) — The Gorman-Rupp Company — Investor Presentation (November 2023)
54 slides from Gorman-Rupp Company (the)'s investor presentation, November 2023
Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION November 2023 NOVEMBER 2023 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 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 of D
Slide 4: 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 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 industry wi
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 2022A Revenue: $152mm* Product Mix Geographic Mix • Widely recognized as #1 fuel • Rugged chemical and transfer pump brand in the industrial fluid transfer pumps 14% 4% 2% 5% 12% industry 34% • Products include pumps and • Products include fixed
Slide 8: 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.” Mansfield, OH Toccoa, GA
Slide 9: Operating Model
OPERATING MODEL Treasury Quality products and Corporate strong reputations Strategic Planning Legal M&A Insurance / Risk Management Customer focus – Information Technology External Reporting & taking care of Employee Benefits Compliance customers Investor Relations Philosophy &
Slide 10: Product Diversity
PRODUCT DIVERSITY NOVEMBER 2023 PRESENTATION 10
Slide 11: 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%) OEM
Slide 12: 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 DRIVERS: Industrial construction, expansion and remodeling NOVEMBER 2023 PR
Slide 13: 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 14: Agriculture & Irrigation
AGRICULTURE & IRRIGATION (14% - 16%) Irrigation pumps supplied to sprinkler installation companies Strategically located branch locations across the U.S. Pumps for fuel transfer, animal waste, pit agitation, and liquid fertilizer DRIVERS: Grower cash flows from farm commodity prices and weathe
Slide 15: 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 16: 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 17: Large Custom Municipal Pumps
LARGE CUSTOM MUNICIPAL PUMPS Flood control pumps capable of pumping up to one million gallons per minute Permanent Canals Closure and Pumps Project in New Orleans Storm water management Wetland restoration DRIVERS: Infrastructure build and re-build; natural disasters NOVEMBER 2023 PRESENTATI
Slide 18: 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 19: 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 20: 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 21: 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
Slide 22: Competition
COMPETITION NOVEMBER 2023 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) – ($5.5B; Pumps/Services $4.1B, 75%) 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) – ($2.0B; Flow/Pum
Slide 25: 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 26: Financial Summary
FINANCIAL SUMMARY NOVEMBER 2023 PRESENTATION 26
Slide 27: Net Sales & Adjusted EPS
NET SALES & ADJUSTED EPS LIFO Expense per share $0.05 $0.13 $0.11 $0.25 $0.06 $0.07 $0.06 180 0.45 160 0.40 140 0.35 Millions of Dollars 120 0.30 (Sales) (Adjusted EPS) 100 0.25 Dollars 80 0.20 60 0.15 40 0.10 20 0.05 0 0.00 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Net Sales Adjusted
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 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Adjusted EBITDA EBITDA % of Sales See appendix for non-GAAP reconciliations. NOVEMBER 2023 PRESENTATION 28
Slide 29: Incoming & Backlog Trend
INCOMING & BACKLOG TREND Total Incoming Orders Backlog Linear (Total Incoming Orders) $300 $250 $200 Millions $150 $100 $50 $0 Q1 Q2 * Q3 * Q4 * Q1 * Q2 * Q3 * 2022 2023 * Amounts include Fill-Rite as of June 2022. NOVEMBER 2023 PRESENTATION 29
Slide 30: Leverage Ratio
LEVERAGE RATIO Fill-Rite Acquisition 5.0 4.9 4.5 4.7 4.4 Total Leverage Ratio 4.0 4.2 3.8 3.5 3.5 3.0 2.5 2.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2022 2023 NOVEMBER 2023 PRESENTATION 30
Slide 31: Historical Capital Allocation
HISTORICAL CAPITAL ALLOCATION Current annualized dividend rate of $0.72 per share Special dividend of $2.00 per share in 2018 Maintenance capital ~ $15 million per year Acquisitions • GR Africa – 2012 • American Turbine Pumps – 2012 • Bayou City Pump – 2014 • GR Belgium – 2015 • Morrison Pump – 2016
Slide 32: 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 Continue to focus on deleve
Slide 33: History of Increasing Dividends
HISTORY OF INCREASING DIVIDENDS 295 Consecutive quarters of cash dividends 51 Consecutive years of increased cash dividends $0.70 $20.0 $18.0 $0.60 Among Top 50 U.S. Public Companies Current annualized rate $0.72 per share $16.0 Annual Dividends Paid ($ Millions) $0.50 2.2% yield as of 9/30/23
Slide 34: Q3 2023 P&L
Q3 2023 P&L Net sales of $167.5 million increased 8.9%, or $13.7 million, compared to the third quarter of 2022 Third quarter net income was $9.0 million, or $0.34 per share, compared to a net income of $2.2 million, or $0.09 per share, for the third quarter of 2022 Adjusted earnings per share
Slide 35: Nine Months Ended September 30, 2023 P&L
NINE MONTHS ENDED SEPTEMBER 30, 2023 P&L Net sales of $498.9 million increased 33.0%, or $123.9 million, compared to 2022, a 17.2% increase excluding sales from Fill-Rite which was acquired in May 2022 Net income was $26.0 million, or $0.99 per share, compared to net income of $8.8 million, or $
Slide 36: Balance Sheet
BALANCE SHEET Total debt, net of cash, decreased $39.5 million, since December 31, 2022 Other assets and other long-term liabilities increased due to a new lease for the relocated and expanded Fill-Rite manufacturing facility in Lenexa, KS ($ in millions) September 30, December 31, September 30,
Slide 37: Pillars for Growth
PILLARS FOR GROWTH NOVEMBER 2023 PRESENTATION 37
Slide 38: Pillars for Growth
PILLARS FOR GROWTH Organic International Acquisitions NOVEMBER 2023 PRESENTATION 38
Slide 39: 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 Expanded Fill-Rite capacity in 2023 ISO Certified 9001, 14001 – G
Slide 40: 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 41: Product Innovation
PRODUCT INNOVATION Majority of products continue to be made in the USA NSF61 Drinking Water Certification Strong team of experienced engineers providing project-specific Registered full pump including engineering expertise and new product development the “can” Continued advancements in challen
Slide 42: 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 43: 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 44: International Distribution Capability
INTERNATIONAL DISTRIBUTION CAPABILITY International sales represent approximately 27% of total company sales annually 2022 Proforma Total International International Sales Sales Mix Mexico / South & Central America 15% Europe 26% $69 $71 million million Canada 22% Exported From USA Direct From Loc
Slide 45: 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 46: 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 47: History of Growth Through Acquisitions
HISTORY OF GROWTH THROUGH ACQUISITIONS Gorman-Rupp has successfully grown through acquisitions Approach to acquisitions remains disciplined and selective Acquisitions since 2010: Year Company Locations Key Markets 2010 National Pump Company AZ, CA, TX, MS, FL Agriculture, Municipal, Petroleum, I
Slide 48: Disciplined M&A Criteria
DISCIPLINED M&A CRITERIA Criteria Preferences Products Pumps or pumping related equipment and systems that complement existing product lines Chemical / Fuels HVAC Municipal Alternative Energy OEM Markets Marine Industrial Dredging Food / BEV / Pharma Customer-Focused Culture
Slide 49: Investment Highlights
INVESTMENT HIGHLIGHTS “We take care of our customers or someone else will” For 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 of D
Slide 50: 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 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 earnings, adjusted earnings per share, adjusted earnings before interest, taxes, depreciation and amortization, referred to as “adjusted EBITDA”, and free cash
Slide 52: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Net Income – GAAP basis $9.0 $2.2 $26.0 $8.8 Plus pension settlement charge - 3.8 - 5.0 Plus one-time acquisition costs - 0.1 - 5.6 Plus amortization of step up in value of acquired inventori
Slide 53: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Three months Nine months ended ended September 30, September 30, 2023 2022 2023 2022 Adjusted earnings before interest, taxes, depreciation and amortization: Reported net income – GAAP basis $9.0 $2.2 $26.0 $8.8 Plus interest expense 10.5 7.6 31.2 9.9 Plus provision for incom
Slide 54: NOVEMBER 2023 PRESENTATION
NOVEMBER 2023 PRESENTATION 54
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