Executive Summary

Q1 2024 net sales were $159.3M (-0.7% YoY) with EPS of $0.30 (+20% YoY); gross margin expanded 200 bps to 30.4% and operating margin rose 90 bps to 12.8% .
Incoming orders set a quarterly record at $178.9M (+7.1% YoY), driving backlog up $16M sequentially to $234.2M, though backlog remains below the $270.6M level a year ago .
Non-GAAP adjusted EPS was $0.30 (vs $0.27 prior year) and adjusted EBITDA was $28.2M (vs $28.4M prior year), reflecting pricing actions and lower LIFO expense, partially offset by higher SG&A .
Guidance: Capex maintained at $18–$20M for FY2024; management still expects backlog to normalize by year-end and remains optimistic on full-year outlook .
Estimates context: S&P Global consensus was unavailable at time of analysis; primary stock reaction catalysts are gross margin durability, record orders in municipal flood/wastewater projects, and backlog trajectory .

What Went Well and What Went Wrong

What Went Well

Gross margin expanded 200 bps to 30.4%, driven by a 230 bps improvement in cost of materials (including 60 bps lower LIFO, 40 bps benefit from the non-repeat of backlog amortization, and 130 bps from price realization) .
Record incoming orders ($178.9M), backlog rose $16M sequentially to $234.2M; CEO: “We continued to deliver gross margin and earnings improvement… We had record incoming orders… increase in backlog of $16 million… remain optimistic…” .
Municipal market strength (flood control, wastewater) and solid demand in construction, petroleum, and industrial supported mix and pricing .

What Went Wrong

Net sales declined slightly (-0.7% YoY) as international sales fell 6.2% and fire suppression bookings faced customer-related shipment delays; agriculture/OEM softness persisted .
SG&A was $24.9M (15.6% of sales) vs 14.5% in Q1’23, as expenses increased to support ongoing growth .
Operating cash flow of $10.7M fell vs $18.6M in Q1’23 on higher working capital needs; net debt remained elevated at $381.6M (down $1.6M YTD), while quarterly interest expense held at $10.1M .

Financial Results

Multi-period performance (oldest → newest)

Metric	Q3 2023	Q4 2023	Q1 2024
Net Sales ($USD Millions)	$167.5	$160.6	$159.3
EPS ($USD)	$0.34	$0.34	$0.30
Gross Margin %	28.7%	31.7%	30.4%
Operating Margin %	13.1%	13.6%	12.8%
Operating Income ($USD Millions)	$21.9	$21.8	$20.4
Adjusted EBITDA ($USD Millions)	$30.5	$29.1	$28.2
Interest Expense ($USD Millions)	$10.5	$10.1	$10.1

Q1 2024 Actual vs Consensus (S&P Global)

Metric	Actual	Consensus (S&P Global)	Surprise
Revenues ($USD Millions)	$159.3	N/A – unavailable	N/A
EPS ($USD)	$0.30	N/A – unavailable	N/A

Market/segment dynamics (Q1 2024 vs Q1 2023)

Market	YoY Sales Change ($USD Millions)	Commentary
Municipal	+$2.8	Flood control and wastewater projects drove growth
Construction	+$0.6	Infrastructure-related demand persisted
Petroleum	+$0.4	Larger transfer pumps demand increased
Industrial	+$0.2	Strengthening broader industrial economy
Repair	Flat	Stable maintenance demand
Fire Suppression	-$3.8	Customer-related shipment delays
OEM	-$0.8	Softer OEM demand
Agriculture	-$0.6	Weather impacted demand

KPIs (Q1 2023 vs Q1 2024)

KPI	Q1 2023	Q1 2024
Backlog ($USD Millions)	$270.6	$234.2
Incoming Orders ($USD Millions)	$167.0 (derived: $178.9 less +$11.9 YoY)	$178.9
Net Cash from Operations ($USD Millions)	$18.6	$10.7
Capital Expenditures ($USD Millions, first three months)	$6.45	$3.91
Net Debt ($USD Millions)	N/A	$381.6
Adjusted EPS ($USD)	$0.27	$0.30
Adjusted EBITDA ($USD Millions)	$28.4	$28.2

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Capital Expenditures	FY 2024	$18–$20M (Feb 2, 2024)	$18–$20M (Apr 25, 2024)	Maintained
Backlog normalization	FY 2024	Expect backlog to return to more normal levels during 2024	Still expect backlog to return to more normal levels by year-end	Maintained (timing clarified to year-end)
Dividend policy	FY 2024	51st consecutive year of increases (FY2023 context)	Not updated in Q1 release	N/A

Earnings Call Themes & Trends

Note: No Q1 2024 earnings call transcript was found after document search in the relevant window.

Topic	Previous Mentions (Q3 2023, Q4 2023)	Current Period (Q1 2024)	Trend
Gross margin and LIFO	Q3: +230 bps YoY margin; LIFO drag -130 bps; pricing benefits . Q4: margin 31.7%; lower LIFO, pricing realization .	Margin 30.4%; +200 bps YoY; LIFO -60 bps; pricing +130 bps .	Improving YoY; slightly below Q4 peak
Municipal infrastructure demand	Q3: municipal timing headwind . Q4: domestic flood/wastewater strong .	Municipal up $2.8M YoY; record orders partly driven by flood/storm water management .	Strengthening
Fire suppression normalization	Q3: strong in 2023; backlog normalization underway . Q4: strong full-year; entering 2024 with elevated backlog .	Sales down $3.8M YoY on shipment delays .	Normalizing / softer
Interest expense and leverage	Q3: higher rates; interest $10.5M . Q4: interest $10.1M; leverage improved .	Interest expense $10.1M; net debt $381.6M (down $1.6M YTD) .	Stable pre-refinance; improvement expected later per Q2 update
Backlog trajectory	Q3: $237.5M; elevated levels . Q4: $218.1M; elevated entering 2024 .	$234.2M (+$16M seq); management expects normalization by year-end .	Elevated but easing
Agriculture/OEM demand	Q3: agriculture strength from Fill-Rite; OEM improving . Q4: agriculture weather headwinds .	Agriculture -$0.6M; OEM -$0.8M YoY .	Softer

Management Commentary

“We continued to deliver gross margin and earnings improvement despite sales being down slightly to last year. We had record incoming orders during the quarter… increase in backlog of $16 million… back to more normal levels by the end of the year. We remain optimistic about our full year outlook and remain focused on delivering profitable growth.” — Scott A. King, President & CEO .
“We achieved our second consecutive year of double-digit organic sales growth… Adjusted EBITDA to a record $121.7 million… improved leverage significantly… As expected, our backlog has come down… remains elevated as we enter 2024.” — Scott A. King (Q4 2023 context) .

Q&A Highlights

No Q1 2024 earnings call transcript was available via our document search; therefore, no Q&A themes or clarifications can be provided for this quarter [SearchDocuments (no results)].

Estimates Context

S&P Global consensus EPS and revenue for Q1 2024 were unavailable at the time of analysis (tool error), so we cannot assess beat/miss vs Street for the quarter. We attempted to fetch “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q1 2024; both returned unavailable due to request limit constraints (S&P Global) [functions.GetEstimates errors].
Given the 200 bps gross margin expansion and record order intake, forward estimates may need to reflect durable pricing/margin structure and backlog conversion cadence in municipal; however, lower fire suppression and higher SG&A are offsetting considerations .

Key Takeaways for Investors

Margin story intact: pricing and lower LIFO drove a 200 bps margin expansion; watch sustainability as mix shifts and SG&A normalizes with growth investments .
Order momentum: record incoming orders and sequential backlog increase point to healthier H1-to-H2 conversion, particularly in municipal flood/wastewater .
Mixed end-market signals: strength in municipal/construction/petroleum vs softness in fire suppression (timing) and agriculture/OEM; portfolio diversity remains a stabilizer .
Cash generation near term impacted by working capital; monitor inventory/receivables turns as backlog normalizes and orders convert .
Interest expense remained high in Q1, but refinancing later in Q2 is expected to reduce annual interest by >$7M; this should be a tailwind to EPS in subsequent quarters .
Capex guidance steady at $18–$20M with focus on machinery and equipment; supports capacity and margin initiatives without overextending balance sheet .
Tactical trade setup: absent Street consensus, focus on margin durability, backlog conversion pace, and any updated commentary on fire suppression timing; catalysts include continued municipal strength and visible interest expense savings in Q2/Q3 prints .

Additional Documents Read

Q1 2024 8-K press release (full text and financials) .
Q4 2023 8-K press release (trend context) .
Q3 2023 8-K press release (trend context) .

Note: No Q1 2024 earnings call transcript or other Q1-specific press releases beyond the 8-K were found in the requested window [ListDocuments results; SearchDocuments returned none].

GORMAN RUPP CO (GRC)·Q1 2024 Earnings Summary