Gorman-Rupp Company (the) · NYSE:GRC

Gorman-Rupp Company (the) — The Gorman-Rupp Company — Investor Presentation (February 2024)

51 slides from Gorman-Rupp Company (the)'s investor presentation, February 2024

  1. Slide 1: Investor Presentation February 2024

    INVESTOR PRESENTATION February 2024 FEBRUARY FEBRUARY2024 2024PRESENTATION PRESENTATION

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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.” Mansfield, OH Toccoa, GA

  8. 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

  9. Slide 9: Product Diversity

    PRODUCT DIVERSITY FEBRUARY 2024 PRESENTATION 9

  10. 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

  11. Slide 11: Industrial / Chemicals & HVAC Supply (21% - 23%)

    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 FEBRUARY

  12. Slide 12: Fire Suppression (19% - 22%)

    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

  13. Slide 13: Agriculture & Irrigation (14% - 16%)

    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 FEBRUARY 2024 PRESENTATIO

  14. Slide 14: Construction & Dewatering (11% - 13%)

    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

  15. Slide 15: Municipal Water & Wastewater (10% - 12%)

    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

  16. 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 FEBRUARY 2024 PRESENTATION 1

  17. Slide 17: OEM (6% - 8%)

    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

  18. Slide 18: Refined Petroleum (2% - 4%)

    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

  19. 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

  20. 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) FEBRUARY

  21. 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

  22. Slide 22: Competition

    COMPETITION FEBRUARY 2024 PRESENTATION 22

  23. 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

  24. 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

  25. 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

  26. Slide 26: Financial Summary

    FINANCIAL SUMMARY FEBRUARY 2024 PRESENTATION 26

  27. Slide 27: Net Sales & Adjusted EPS

    NET SALES & ADJUSTED EPS 180 0.45 160 0.40 140 0.35 120 0.30 100 0.25 Millions of Dollars (Adjusted EPS) Dollars (Sales) 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 Q4 2023 Net Sales Adjusted EPS See appendix for non-GAAP reconciliations. * Unusua

  28. 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 Q4 2023 Adjusted EBITDA EBITDA % of Sales See appendix for non-GAAP reconciliations. FEBRUARY 2024 PRESENTATION 28

  29. Slide 29: Incoming & Backlog Trend

    INCOMING & BACKLOG TREND Total Incoming Orders Backlog $300 $250 $200 Millions $150 $100 $50 $0 Q1 Q2 * Q3 * Q4 * Q1 * Q2 * Q3 * Q4 * 2022 2023 * Amounts include Fill-Rite as of June 2022. FEBRUARY 2024 PRESENTATION 29

  30. 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 3.0 2.5 2.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2022 2023 FEBRUARY 2024 PRESENTATION 30

  31. Slide 31: Capital Allocation

    CAPITAL ALLOCATION Historical Current Priorities  Our maintenance capital expenditures are expected to be ~$15mm per year  We expect to maintain our dividend practices while achieving our leverage target  Continue to focus on deleveraging  Leverage as of December 31, 2023 was 3.3x  Once we dele

  32. Slide 32: History of Increasing Dividends

    HISTORY OF INCREASING DIVIDENDS  296 Consecutive quarters of cash dividends  51 Consecutive years of increased cash dividends $0.70 $20.0 Among Top 50 U.S. Public Companies $18.0 $0.60 Current annualized rate $0.72 per share $16.0  2.0% yield as of 12/31/23 Annual Dividends Paid ($ Millions) $0.5

  33. Slide 33: Q4 2023 P&L

    Q4 2023 P&L  Net sales of $160.6 million increased 10.0%, or $14.6 million, compared to the fourth quarter of 2022  Fourth quarter net income was $9.0 million, or $0.34 per share, compared to a net income of $2.4 million, or $0.09 per share, for the fourth quarter of 2022  Adjusted earnings per s

  34. Slide 34: Year Ended December 31, 2023 P&L

    YEAR ENDED DECEMBER 31, 2023 P&L  Net sales of $659.5 million increased 26.6%, or $138.5 million, compared to 2022, a 15.8% increase excluding sales from Fill-Rite which was acquired in May 2022  Net income was $35.0 million, or $1.34 per share, compared to net income of $11.2 million, or $0.43 pe

  35. Slide 35: Balance Sheet

    BALANCE SHEET  Total debt, net of cash, decreased $58.2 million during 2023  Other assets and other long-term liabilities increased due to a new lease for the relocated and expanded Fill-Rite manufacturing facility in Lenexa, KS ($ in millions) December 31, December 31, December 31, December 31, 2

  36. Slide 36: Strategic Pillars

    STRATEGIC PILLARS FEBRUARY 2024 PRESENTATION 36

  37. Slide 37: 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

  38. Slide 38: 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

  39. Slide 39: 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

  40. Slide 40: 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

  41. Slide 41: 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

  42. Slide 42: 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

  43. Slide 43: 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

  44. Slide 44: 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

  45. Slide 45: 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 

  46. Slide 46: 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

  47. Slide 47: 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

  48. Slide 48: 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

  49. Slide 49: Non-GAAP Reconciliation

    NON-GAAP RECONCILIATION Three months ended Year ended December 31, December 31, 2023 2022 2023 2022 Net Income – GAAP basis $9.0 $2.4 $35.0 $11.2 Plus pension settlement charge - 0.1 - 5.2 Plus one-time acquisition costs - - - 5.8 Plus amortization of step up in value of acquired inventories - - - 1

  50. Slide 50: Non-GAAP Reconciliation

    NON-GAAP RECONCILIATION Three months Year ended ended December 31, December 31, 2023 2022 2023 2022 Adjusted earnings before interest, taxes, depreciation and amortization: Reported net income – GAAP basis $9.0 $2.4 $34.9 $11.2 Plus interest expense 10.1 9.4 41.3 19.2 Plus provision for income taxes

  51. Slide 51: FEBRUARY 2024 PRESENTATION

    FEBRUARY 2024 PRESENTATION 51

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