The Gorman-Rupp Company — 2013 Form 10-K
Business and period: The company designs, manufactures, and sells pumps and pump systems for water, wastewater, construction, industrial, petroleum, agriculture, fire protection, and other liquid-handling applications. It reports one business segment. This filing covers the fiscal year ended December 31, 2013.
Financial and operating results
| Metric | 2013 | 2012 | Change |
|---|---|---|---|
| Net sales | $391.7 million | $375.7 million | Up 4.3% |
| Income before income taxes | $44.3 million | $42.4 million | Up 4.3% |
| Year-end assets | $355.6 million | $335.2 million | Up 6.1% |
| Pre-tax margin | 11.3% | 11.3% | Approximately flat |
International shipments were $134.6 million, or 34% of sales, compared with $136.5 million, or 36%, in 2012. The filing text provided here does not give clear values for net income, cash flow, debt, or liquidity; the financial statements and MD&A are incorporated by reference to the 2013 shareholder report.
Material changes and outlook
- Year-end backlog rose to $182.2 million from $143.4 million. Approximately 77% was scheduled for shipment in 2014, with most of the balance scheduled for the first half of 2015.
- The backlog increase primarily reflected a roughly $60 million award for major flood-control pumps for the Permanent Canal Closure Project in New Orleans. About $57.6 million remained in backlog at year-end. The fixed-price contract has appropriated government funding.
- The company shipped to more than 120 countries. No customer represented more than 10% of sales, and no single foreign country represented more than 5%.
- No formal earnings or revenue guidance is provided in the supplied filing text. Backlog timing is not a guarantee of future sales or shipment.
Risks, contingencies, and controls
- Management identifies pump-industry cyclicality and uncertainty in economic and capital-equipment markets, as well as volatile raw-material and energy costs. Passing higher costs to customers may be constrained by competition.
- International operations expose the company to import-export compliance requirements and potential penalties; future rules could restrict markets or increase sourcing costs. Management says foreign operations do not create material market risk because of their relatively small size.
- Some motor and engine components are sourced from a limited number of suppliers, although the company reports no material dependence on a single supplier for its inputs overall.
- The company and subsidiaries remain defendants in industry-wide asbestos litigation. Insurers provide legal representation; management does not currently expect the litigation or other ordinary-course proceedings to materially affect results, liquidity, or financial condition.
- Family members and affiliates hold a substantial share of the stock, which the company says contributes to relatively low trading volume.
- Management reported effective disclosure controls, no identified material weaknesses in internal control during 2013, and no material fourth-quarter changes to internal control over financial reporting.
Key facts for investors to verify
- Review the incorporated financial statements and MD&A for net income, cash flow, debt, liquidity, and a fuller explanation of operating results; those details are not reproduced in the supplied filing text.
- Assess execution, timing, and cost exposure of the fixed-price New Orleans flood-control contract, including the remaining backlog and applicable termination, suspension, and default provisions.
- Compare backlog conversion and international sales trends with subsequent filings, and evaluate exposure to pump-market cycles, input costs, and export regulation.
- Review subsequent disclosures for developments in asbestos litigation and other contingencies.