Gorman-Rupp Company (the) · NYSE:GRC

Gorman-Rupp Company (the) — The Gorman-Rupp Company — Investor Presentation (September 2022)

55 slides from Gorman-Rupp Company (the)'s investor presentation, September 2022

  1. Slide 1: Investor Presentation September 2022

    September 2022 SEPTEMBER 2022 PRESENTATION INVESTOR 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: 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 fami

  4. Slide 4: 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

  5. Slide 5: 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

  6. Slide 6: 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 industrial fluid transfer pumps 4% 4% 3% transfer pump brand in the 14% 8% industry 34% • Products include pumps and • Products include fixed a

  7. Slide 7: Industry Overview

    INDUSTRY OVERVIEW  Pumps touch our daily lives – drinking water, wastewater, sewage, irrigation, appliances, transportation, fuel, industrial, chemical, fire suppression, construction, HVAC  Many specialized pumps – due to many specialized applications  Very fragmented and niche oriented  Increa

  8. Slide 8: Market Diversity – By Design

    MARKET DIVERSITY – BY DESIGN Gorman‐Rupp Company Markets (excluding Fill‐Rite) Water & Water‐Related (58%) • Fire Suppression (24% ‐ 27%) • Municipal Water / Wastewater & Flood Control (15% ‐ 18%) • Construction & Dewatering (8% ‐ 10%) Repair Parts • Agriculture & Irrigation Supply (4% ‐ 5%) Fire Su

  9. Slide 9: Product Diversity

    PRODUCT DIVERSITY SEPTEMBER 2022 PRESENTATION 9

  10. Slide 10: Water Markets

    WATER MARKETS AUGUST 2022 PRESENTATION 10

  11. Slide 11: Fire Suppression (24%-27%)

    FIRE SUPPRESSION (24% ‐ 27%)  Booster pumps for sprinkler systems in large commercial structures  Fire pumps are FM Global approved and an industry standard  Manufacturing facility in Ireland for increased capacity  Domestic and international market leader DRIVERS: Commercial and industrial cons

  12. Slide 12: Municipal Water & Wastewater (15%-18%)

    MUNICIPAL WATER & WASTEWATER (15% ‐ 18%)  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

  13. Slide 13: 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 SEPTEMB

  14. Slide 14: Construction & Dewatering (8%-10%)

    CONSTRUCTION & DEWATERING (8% ‐ 10%)  Self‐priming 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 contractors  Support of fracking

  15. Slide 15: Agriculture & Irrigation (4%-5%)

    AGRICULTURE & IRRIGATION (4% ‐ 5%)  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 financi

  16. Slide 16: Non-Water Markets

    NON‐WATER MARKETS AUGUST 2022 PRESENTATION 16

  17. Slide 17: Industrial / Chemicals & HVAC Supply (16%-18%)

    INDUSTRIAL / CHEMICALS & HVAC SUPPLY (16% ‐ 18%)  Dependable pumps for manufacturing applications  Pumps for moving heavy sludges, slurries and other viscous materials  HVAC pump market share expanding DRIVERS: Industrial construction, and expansion and remodeling SEPTEMBER 2022 PRESENTATION 17

  18. Slide 18: Refined Petroleum (4%-5%)

    REFINED PETROLEUM (4% ‐ 5%)  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

  19. Slide 19: OEM (8%-10%)

    OEM (8% ‐ 10%) 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

  20. Slide 20: Repair Parts

    REPAIR PARTS  Most parts ship within 24 hours  Consolidated 12% ‐ 13%  Large range – from 30% for Construction/Industrial to minimal for Fire Suppression  About 17% ‐ 18% adjusted for markets with minimal repairs HOW LONG DO PUMPS LAST? Many Variables The Right Pump for the job! Abrasive Wear Co

  21. Slide 21: Divisions / Markets

    DIVISIONS / MARKETS National Custom Gorman-Rupp Patterson Pumps Pumps Pumps Fill-Rite Pumps Group Group Group Group Group End Markets USA CANADA EUROPE AFRIA Fire Suppression   Municipal Water, Wastewater & Flood Control         Construction & Dewatering       Agriculture & Irrigatio

  22. Slide 22: Competition

    COMPETITION AUGUST 2022 PRESENTATION 22

  23. Slide 23: Notable Pump Competitors

    NOTABLE PUMP COMPETITORS GORMAN-RUPP MARKETS Fire Flood Company Suppression Municipal 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

  24. Slide 24: Notable Pump Competitors

    NOTABLE PUMP COMPETITORS GORMAN-RUPP MARKETS Fire Flood Company Suppression Municipal Control Construction Agriculture Industrial Petroleum OEM Pentair (PNR) – ($3.8B; 100% Flow/Pumps)  Hydromatic     Aurora      Fairbanks Nijhuis         Franklin Electric (FELE) – ($1.7B; Flow/Pum

  25. Slide 25: Notable Pump Competitors

    NOTABLE PUMP COMPETITORS GORMAN-RUPP MARKETS Fire Flood Company Suppression Municipal Control Construction Agriculture Industrial Petroleum OEM Host of private companies/divisions  Smith & Loveless   BJM / Stancor      Thompson Pumps        Zoeller Pumps     Vaughan Pumps    

  26. Slide 26: Financial Summary

    FINANCIAL SUMMARY AUGUST 2022 PRESENTATION 26

  27. Slide 27: Net Sales & Net Income

    NET SALES & NET INCOME 2020 COVID‐19 480 45 420 40 35 360 Millions of Dollars Millions of Dollars 30 (Net Income) 300 (Sales) 25 240 20 180 15 120 10 60 5 0 0 2017 2018 2019 2020 2021 2022 Net Sales 6 mos. YTD Net Income Net Income without (Non‐Cash) Settlement Loss and Impairment Charges Net Sales

  28. Slide 28: 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 6 mos. YTD Free Cash Flow Adjusted EBITDA, percent of net sales Adjusted EBITDA A) 2018 Free Cash Flow excludes $52.2 mil

  29. Slide 29: Historical Capital Allocation

    HISTORICAL CAPITAL ALLOCATION  Return of capital to shareholders through dividends  Maintenance capital ~ $15 million per year Current annualized dividend rate of $0.68 per share 90 Special dividend of $2.00 per share in 2018 80 Capital Expenditures 70 • National Pump Building Expansions • $2.4 Mi

  30. Slide 30: 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 delever

  31. Slide 31: Growth of Shares

    GROWTH OF 100 SHARES  Share growth through stock dividends and splits  CAGR of 6.9% since 1968 $96,217 A) 2500 2,323 Shares 2000 Number of Shares 1500 1000 500 $2,600 100 shares 0 A) As of 6/30/22, value of $65,741 at $28.30/share and cash dividends received of $30,476. SEPTEMBER 2022 PRESENTATION

  32. Slide 32: History of Increasing Dividends

    HISTORY OF INCREASING DIVIDENDS  290 Consecutive quarters of cash dividends  49 Consecutive years of increased cash dividends $0.70 $18.0 Among Top 50 U.S. Public Companies $16.0 $0.60 Current annualized rate $0.68 per share  2.4%/year of $28.30/share 6/30/22 $14.0 Annual Dividends Paid ($ Millio

  33. Slide 33: Q2 2022 P&L

    Q2 2022 P&L  Completed acquisition of Fill‐Rite  Adjusted EPS was $0.27 per share compared $0.32 for Q2 2021  Results included an unfavorable LIFO impact of $0.13 and $0.02 per in 2022 and 2021, respectively  Sales increased 28.0% or $26.1 million, a 13.4% increase excluding Fill‐Rite  Gross ma

  34. Slide 34: Six Months Ended June 30, 2022 P&L

    SIX MONTHS ENDED JUNE 30, 2022 P&L  Adjusted EPS of $0.56 compared to $0.61 for 2021 Results included unfavorable LIFO impacts of $0.18 and $0.04 in 2022 and 2021, respectively  Sales increased 21.5% or $39.2 million, a 14.1% increase excluding Fill‐Rite  Gross margin included $1.4 million of in

  35. Slide 35: Balance Sheet

    BALANCE SHEET  Fill‐Rite acquisition decreased cash, and increased debt, goodwill and intangibles and net working capital ($ in millions) June 30, December 31, June 30, December 31, 2022 2021 2022 2021 ASSETS LIABILITIES & SHAREHOLDERS’ EQUITY Cash and cash equivalents $16.8 $125.2 Current portion

  36. Slide 36: Pillars for Growth

    PILLARS FOR GROWTH AUGUST 2022 PRESENTATION 36

  37. Slide 37: Pillars for Growth

    PILLARS FOR GROWTH Organic International Acquisitions SEPTEMBER 2022 PRESENTATION 37

  38. Slide 38: 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  ISO Certified 9001, 14001 – GR Pumps USA, Patterson, National Pump

  39. Slide 39: 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

  40. Slide 40: Product Innovation

    PRODUCT INNOVATION  Majority of products continue to be made in the USA  Strong team of experienced engineers providing project‐specific engineering expertise and new product development  Continued advancements in challenging applications like clogged sewage systems or abrasive materials  Advanc

  41. Slide 41: 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 develop and factory productivity improveme

  42. Slide 42: 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

  43. Slide 43: International Distribution Capability

    INTERNATIONAL DISTRIBUTION CAPABILITY  International sales represent approximately 31% of total company sales annually 2021 Total International Sales Mix (excluding Fill‐Rite) International Sales Africa 12% Mexico / Europe South & 29% Central America $66 13% $52 million million Canada Exported From

  44. Slide 44: 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

  45. Slide 45: 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

  46. Slide 46: 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

  47. Slide 47: 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

  48. Slide 48: 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,

  49. Slide 49: 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

  50. Slide 50: Investment Highlights

    INVESTMENT HIGHLIGHTS  Over 85 years of innovation and quality pump leadership  Consistent management team with proven results  Product and market diversification  Well positioned for long‐term sustainable growth  History of returning capital to shareholders  Fill‐Rite is expected to be accret

  51. Slide 51: 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

  52. Slide 52: 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

  53. Slide 53: Non-GAAP Reconciliation

    NON‐GAAP RECONCILIATION Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Net Income (loss) – GAAP basis ($1.0) $7.1 $6.5 $14.5 Plus pension settlement charge 1.3 1.4 1.3 1.4 Plus one‐time acquisition costs 5.4 ‐ 5.4 ‐ Plus amortization of step up in value of acquired invento

  54. Slide 54: Non-GAAP Reconciliation

    NON‐GAAP RECONCILIATION Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Adjusted earnings (loss) before interest, taxes, depreciation and amortization: Reported net income (loss) – GAAP basis ($1.0) $7.1 $6.5 $14.5 Plus interest expense 2.3 ‐ 2.3 ‐ Plus provision (benefit)

  55. Slide 55: CLICK TO EDIT MASTER TITLE STYLE

    CLICK TO EDIT MASTER TITLE STYLE AUGUST 2022 PRESENTATION 55

The Gorman-Rupp Company — Investor Presentation (September 2022) on 6ix