Gorman-Rupp Company (GRC) 2024 Southwest IDEAS Conference summary

Business overview and market position

• Operates as a diversified pump manufacturer with a broad product range and market reach, including fire suppression, industrial, agriculture, construction, municipal, petroleum, and OEM sectors.

• Maintains a strong U.S.-based supply chain and manufacturing footprint, which minimized disruptions during COVID and supports competitive lead times.

• Sells primarily through a trained distribution network, with about 25% of sales international following the Fill-Rite acquisition in 2022.

• Focuses on quality, customer service, and employee engagement, with all employees participating in profit sharing and career development.

• No single market accounts for more than 25% of sales, providing stability and resilience across economic cycles.

Financial performance and capital allocation

• Achieved double-digit organic sales growth in 2022 (15%) and 2023 (16%), driven by pricing, market share gains, and improved distribution.

• 2023 Adjusted EBITDA reached a record $122 million, up 37% from 2022, with EBITDA margin at 18% of sales and continued improvement into 2024.

• Incoming orders for 2024 are up 4% year-over-year, with a healthy backlog of $208 million at Q3, positioning the company well for late 2024 and early 2025.

• Successfully reduced leverage from 4.8x post-Fill-Rite acquisition to 2.9x by Q3 2024, ahead of expectations, aided by strong cash flow and debt refinancing.

• Ongoing capital allocation priorities include $20 million annual reinvestment, continued dividend increases (52 consecutive years), deleveraging, and future acquisitions once leverage is further reduced.

Growth strategy and operational initiatives

• Targets mid-single digit organic growth over the long term, driven by new product development, market share expansion, and infrastructure spending.

• Invests consistently in R&D (a couple percent of sales), resulting in new products addressing customer needs and efficiency improvements.

• Sees international expansion as a key opportunity, leveraging existing facilities in Europe, South Africa, and Canada, and exploring Fill-Rite's global potential.

• Operational excellence initiatives include automation, capacity expansion, and leveraging underutilized facilities for future growth.

• Maintains disciplined acquisition criteria, favoring larger, culturally aligned targets within the pump industry to drive inorganic growth.