The Gorman-Rupp Company (NYSE Amex: GRC) reports record sales, earnings and incoming orders for the year ended December 31, 2011. In addition, the Company ended the year with record working capital and attained its thirty-ninth consecutive year of increased cash dividends paid to shareholders. Results for 2011 and 2010 include the operations of National Pump Company since its October 1, 2010 acquisition date.
Net sales during 2011 increased 21.1% to a record $359.5 million compared to $296.8 million during 2010. International sales increased 2% and were 33% of total sales in 2011. Sales to most markets increased in 2011 with primary increases in the industrial, construction, agricultural and municipal markets, while OEM and international fire protection sales declined due to continued areas of economic weakness. Net income increased 10.8% to a record $28.8 million in 2011 compared to the previous record of $26.0 million in 2010. Earnings per share were $1.37 and $1.24 for the respective periods, a 10.5% increase.
As noted in the Company’s third quarter 2011 Form 10-Q, a GAAP-required $3.0 million pension settlement charge was recorded in October and decreased annual and fourth quarter earnings by $0.10 per share. Excluding this non-cash charge, 2011 annual earnings per share grew 18.5% to $1.47 per share. The other major annual expense difference was $0.11 per share of higher LIFO expense in 2011 when compared to the post-recessionary lower LIFO costs in 2010.
Net sales during the quarter ended December 31, 2011 increased 9.8% to a record $93.0 million compared to $84.7 million during the same period in 2010. Sales growth in the fourth quarter of 2011 was primarily due to increases in the construction, petroleum, industrial and agricultural markets compared to the same period last year. International sales increased 18% and were 36% of total fourth quarter 2011 sales with primary increases in the OEM and petroleum markets. Profitability increased at a slower rate during the quarter due to product mix, including increased sales of larger engine-driven pump systems, slightly reducing fourth quarter 2011 gross margin. Due to new government emissions standards, the costs of these purchased engines will continue to increase and put some margin pressure on our construction market sales.