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The Gorman-Rupp Company (NYSE MKT: GRC) reports financial results for the fourth quarter and year ended December 31, 2013.
Net sales during the fourth quarter 2013 increased 3.3% to $91.6 million compared to $88.7 million during the same period in 2012. Domestic sales increased 6.2% or $3.4 million while international sales decreased 1.6% or $0.5 million. Sales in our water end markets increased $2.4 million largely due to domestic water supply projects. Sales in our non-water end markets were principally unchanged.
Net sales for the year ended December 31, 2013 were a record $391.7 million compared to $375.7 million during the same period in 2012, an increase of 4.3%. Domestic sales increased 7.5% or $17.9 million while international sales decreased 1.4% or $1.9 million. The increase in water end market sales of $13.3 million was primarily due to shipments for the fire and agricultural markets and for Gulf Coast flood control projects in the first half of 2013. This increase was partially offset by reduced construction market demand for pumps from rental businesses as compared to this market’s strong sales early in 2012. Increased shipments for the petroleum and industrial markets were the major contributors to the increase in our non-water market sales of $2.6 million.
Due to continuing lump-sum retirement payments, the Company recorded a GAAP-required $0.7 million non-cash pension settlement charge during the fourth quarter of 2013 relating to its defined benefit pension plan compared to $2.9 million during the same period in 2012. This charge was not required to be recognized in 2012 until the actuarial payments threshold was exceeded in the fourth quarter. In 2013, these charges were required to be recognized in each quarter, as the actuarial payments threshold was exceeded early in the year, and totaled $4.2 million.
Gross profit was $21.5 million for the fourth quarter 2013 resulting in gross margin of 23.4% compared to 21.3% in the same period in 2012. The increase in gross margin was principally due to sales mix changes and the lower non-cash pension settlement charge during the current quarter as described above. Excluding the pension settlement charges, gross margin would have been 23.9% and 23.5%, respectively. Operating income was $8.1 million resulting in operating margin of 8.9% in 2013 compared to 6.0% 2012. Excluding the pension settlement charges, operating margin would have been 9.6% and 9.4%, respectively.