On Friday, the Gorman-Rupp Company reported financial results for the fourth quarter and year ending December 31, 2017.
Fourth Quarter 2017 Highlights
- Current quarter earnings per share were $0.31 compared to $0.19 per share for the fourth quarter of 2016
- Fourth quarter of 2016 included a non-cash impairment charge of $0.05 per share
- Net sales increased 0.8% or $0.7 million. Excluding the PCCP project, net sales increased 1.3% or $1.2 million
- Incoming orders increased 6% compared to the fourth quarter of 2016
- The U.S. Tax Cuts and Jobs Act is expected to have a favorable impact on our future income tax rate
Net sales for the fourth quarter of 2017 were $94.9 million compared to $94.2 million for the fourth quarter of 2016, an increase of 0.8% or $0.7 million. Excluding sales from the New Orleans Permanent Canal Closures & Pumps (“PCCP”) project of $0.5 million for the fourth quarter of 2016, net sales increased 1.3% or $1.2 million. Domestic sales, excluding PCCP, decreased 0.2% or $0.1 million while international sales increased 4.0% or $1.3 million compared to the same period in 2016.
Net sales for the year ended December 31, 2017 were $379.4 million compared to $382.1 million for 2016, a decrease of 0.7% or $2.7 million. Excluding sales from the PCCP project of $0.7 million in 2017 and $9.9 million in 2016, net sales in 2017 increased 1.8% or $6.5 million. Domestic sales, excluding PCCP, increased $0.1 million while international sales increased 4.9% or $6.4 million.
On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Act”) was enacted. The transitional impacts of the Tax Act resulted in a provisional net charge of $0.4 million for the fourth quarter of 2017, comprised of an estimated repatriation tax charge of $2.0 million (which includes U.S. repatriation taxes and foreign withholding taxes) and a net deferred tax benefit of approximately $1.6 million. The provisional estimates are based on the Company’s initial analysis of the Tax Act. Given the significant complexity of the Tax Act, anticipated guidance from the U. S. Treasury about implementing the Tax Act, and the potential for additional guidance from the Securities and Exchange Commission or the Financial Accounting Standards Board related to the Tax Act, these estimates may be adjusted during 2018. The Company’s preliminary estimate of its future effective tax rate attributable to the Tax Act is between 23% and 26%. The Company continues to evaluate the impact of the Tax Act, and will update its estimates as appropriate.
Jeffrey S. Gorman, President and CEO commented, “We finished 2017 with strong fourth quarter results. A continued focus on production efficiencies and cost control has delivered another quarter of improved gross and operating margins. While we continue to experience softness in the agriculture and certain oil and gas driven markets, we enter 2018 with a stronger backlog and sales momentum in many of our other markets. Increased emphasis on infrastructure improvements at both the federal and state levels, along with the newly enacted tax legislation, could be additional positive factors over the next several years. As we celebrate our 85th anniversary in 2018, we would like to thank our customers, associates and shareholders for their continued support.”
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