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The Gorman-Rupp Company (NYSE MKT: GRC) reports financial results for the fourth quarter and twelve months ended December 31, 2012, highlighted by record sales during 2012 and the attainment of forty consecutive years of increased cash dividends paid to shareholders. Operating results for 2012 include Pumptron (Proprietary) Limited (“Pumptron”) and the American Turbine Pump companies (“American Turbine”) acquired in the third and fourth quarters of 2012, respectively.
Net sales for the twelve months ended December 31, 2012 increased 4.5% to a record $375.7 million compared to $359.5 million during the same period in 2011. Encouragingly, total international sales increased more than 15% to a record $136.5 million. Sales improved 6.0% in our larger water end markets and 4.9% in our non-water end markets. Major contributions to water market sales were international shipments of pumps for fire protection and an increase in agricultural market sales, partially offset by reduced construction market demand for pumps for natural gas drilling applications and from rental businesses. The increase in non-water market sales was primarily due to petroleum market shipments and international industrial market shipments. Sales of repair parts decreased modestly during 2012, as sales during 2011 were bolstered by pent-up demand.
Gross profit was $90.2 million in 2012, resulting in gross margin of 24.0% compared to 24.4% in 2011. The decline in gross margin was principally due to a less favorable product mix combined with increases in healthcare costs and depreciation expense. Operating income was $42.2 million resulting in operating margin of 11.2% compared to 12.0% in 2011. The decline in operating margin was impacted as well by non-recurring acquisition-related expenses. As noted in the Company’s third quarter 2012 Form 10-Q, a GAAP-required $2.9 million non-cash pension settlement charge was subsequently required to be recorded in the fourth quarter 2012; this was comparable to the $3.0 million non-cash pension settlement charge recorded in the fourth quarter 2011. Excluding these non-cash charges, gross margin was 24.5% and 25.0% and operating margin was 12.0% and 12.8% for 2012 and 2011, respectively.