Graco Inc, USA

Graco Inc, USA

COMPANY WATCH Graco Inc, USA The Gorman-Rupp Co, USA Key Figures (US$ million) Three months ended 31.3 2014 2013 110.1 92.5 Cost of Products Sol...

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COMPANY WATCH

Graco Inc, USA

The Gorman-Rupp Co, USA Key Figures (US$ million) Three months ended 31.3 2014

2013

110.1

92.5

Cost of Products Sold

82.5

71.2

Gross Profit

27.6

21.2

Selling, General and Admin Expenses

12.9

13.0

Operating Income

14.7

8.3

Income before Income Taxes

14.8

8.2

Net Income

10.0

5.8

Net Sales

COMMENT The Gorman-Rupp Co has got off to a strong start in 2014 with record quarterly net sales of US$110.1 million, up from US$92.5 million during the first quarter of 2013. Domestic sales were up 28.0% or US$15.7 million, while international sales increased 5.3% or US$1.9 million. Sales in water end markets gained US$12.0 million while sales in non-water end markets rose US$5.6 million during the first quarter. The lift in water end market sales was due about equally to increases in shipments of US$4.1 million in the construction market mainly for pumps for rental businesses and for oil and gas drilling and fracking within North America, US$4.1 million in the fire market due to increased domestic commercial construction spending, and US$4.3 million in the municipal market driven by large volume pumps for wastewater and water supply. Sales increased US$5.6 million in the nonwater markets primarily due to increased shipments for the OEM market related to power generation equipment and pumps for military applications. Net income was US$10.0 million during the first quarter

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Pump Industry Analyst

of 2014 compared with US$5.8 million in the first quarter of 2013. The pump company’s backlog of orders at 31 March 2014 was US$171.7 million, down from US$182.2 million at the end of December 2013. Incoming orders were up 19% during the quarter reflecting increased activity across water end markets. The US$10.5 million decrease in backlog is principally due to record shipments during the current quarter. Approximately US$56.1 million of the PCCP project to supply major flood control pumps to a member of a joint venture construction group for a significant New Orleans flood control project remain in the March 2014 backlog total. The pumps for this project are expected to be shipped mainly in the second half of 2014 and first half of 2015. Jeffrey Gorman, GormanRupp president and CEO, said: “We are encouraged by the on-going stabilisation in key markets the company serves and continue to believe 2014 should be a solid year for the company.” ■ www.gormanrupp.com

Key Figures (US$ million) Thirteen weeks ended 28.3.2014

29.3.2013

Net Sales Of Which: Industrial

290.0

269.0

176.4

164.2

Cost of Products Sold

130.7

118.4

Gross Profit

159.3

150.6

13.2

12.4

Product Development Selling, Marketing and Distribution

46.3

43.4

Operating Earnings Of Which: Industrial

74.7

71.5

55.2

55.2

Net Earnings

50.7

52.1

COMMENT Graco Inc’s first quarter 2014 sales increased 8%, including 3 percentage points from acquired operations. All reportable segments had single digit percentage increases. Sales increases in the Americas and EMEA were partially offset by a decrease in Asia Pacific. While operating earnings increased 4%, a higher effective income tax rate led to a decrease in net earnings. “This is the eleventh consecutive quarter of Graco reporting record quarterly sales,” said Patrick McHale, Graco’s president and CEO. “We experienced good organic growth in all of our reportable segments in the Americas, led by a double digit sales increase in our Contractor business that continues to benefit from the recovery in residential construction. In our EMEA region, mid single-digit organic growth in the developed economies was somewhat offset by reduced customer demand in certain emerging markets due to geopolitical and currency concerns. As expected, sales in the Asia Pacific region declined in the first quarter, reflecting uneven demand rates.”

Industrial segment sales increased 7%, with gains of 19% in the Americas and 8% in EMEA, partially offset by a 9% decrease in Asia Pacific. First quarter results included the operations of QED Environmental Systems, bought at the start of fiscal 2014, and EcoQuip, acquired at the end of fiscal 2013. Acquired operations contributed US$7 million to sales of this segment. “Our outlook for 2014 has not changed, and we remain confident about achieving full year growth in all segments and regions,” said McHale. “While US housing starts began 2014 slower than anticipated, we continue to expect strong full year growth in the residential construction market to drive low double-digit growth in our Contractor segment in the Americas. Although certain emerging economies of EMEA are facing geopolitical and currency headwinds, and capital equipment demand in China remains choppy, we expect to benefit from the improving macro environment in developed economies around the world.” ■ www.graco.com

April 2014