Gorman-Rupp Reports Fourth Quarter and Full-Year 2016 Financial Results

The Gorman-Rupp Company (NYSE MKT: GRC) reports financial results for
the fourth quarter and year ended December 31, 2016.

Net sales during the fourth quarter were $94.2 million compared to $98.8
million during the fourth quarter of 2015, a decrease of 4.6% or $4.6
million. Excluding sales from the New Orleans Permanent Canal Closures &
Pumps (“PCCP”) project of $0.5 million in the fourth quarter of 2016 and
$7.4 million for the same period in 2015, net sales during the quarter
increased 2.5% or $2.3 million. Domestic sales, excluding PCCP,
increased 8.8% or $4.9 million and international sales decreased 7.1% or
$2.6 million compared to the same period in 2015.

Sales in our larger water markets, excluding PCCP, increased 4.7% or
$3.0 million in the fourth quarter of 2016 compared to the fourth
quarter of 2015. Sales in the municipal market, excluding PCCP,
increased $3.1 million driven by increased shipments attributable to
clean water and wastewater applications. Sales in the agriculture market
increased $0.8 million due to improved international shipments and sales
in the construction market increased $0.6 million due primarily to sales
to new customers. However, sales in the fire protection market decreased
$1.6 million principally due to market softness in the Middle East.

Sales decreased 2.2% or $0.7 million in non-water markets during the
fourth quarter of 2016 compared to the fourth quarter of 2015. Sales in
the industrial and petroleum markets decreased a combined $1.2 million
principally attributable to the slowdown in oil and gas production.
These decreases were partially offset by increased shipments of $0.6
million in the OEM market driven by sales of fuel-handling pumps.

Net sales for the year ended December 31, 2016 were $382.1 million
compared to $406.2 million for 2015, a decrease of 5.9% or $24.1
million. Excluding sales from the PCCP project of $9.9 million in 2016
and $37.7 million in 2015, net sales in 2016 increased 1.0% or $3.7
million. Domestic sales, excluding PCCP, increased 3.9% or $9.0 million
and international sales decreased 3.9% or $5.3 million. Of the total
decrease in net sales in 2016, approximately $0.9 million was due to
unfavorable foreign currency translation.

Sales in our larger water markets, excluding PCCP, increased 3.6% or
$9.1 million in 2016 compared to 2015. Sales in the municipal market,
excluding PCCP, increased $15.1 million driven by increased shipments
attributable to other flood control projects, clean water and wastewater
applications. Sales in the construction market increased $2.7 million
due primarily to sales to rental businesses and sales to new customers.
However, sales decreased $3.7 million in the fire protection market due
to market softness domestically and in the Middle East, and $2.3 million
in the agriculture market principally due to wet weather conditions in
many domestic locations and lower farm income. In addition, sales of
repair parts decreased $2.8 million.

Sales decreased 4.6% or $5.4 million in non-water markets during 2016
compared to 2015. Increased sales of $3.2 million in the OEM market
related to power generation equipment and services were offset by a
decrease of $7.7 million in the industrial market largely attributable
to the slowdown in oil and gas production.

Gross profit was $23.2 million for the fourth quarter of 2016, resulting
in gross margin of 24.7%, compared to gross profit of $21.2 million and
gross margin of 21.5% for the same period in 2015. The quarter’s gross
margin increase was due principally to favorable sales mix changes, most
notably within the municipal market, and a non-cash pension settlement
charge of 30 basis points in the fourth quarter of 2015 which did not
recur in the same period in 2016.

Operating income was $7.1 million, resulting in operating margin of 7.5%
for the fourth quarter of 2016, compared to operating income of $7.0
million and operating margin of 7.0% for the same period in 2015. In the
fourth quarter of 2016 due to the prolonged downturn in the oil and gas
industry, the Bayou City Pump Company reporting unit recorded a pre-tax
non-cash goodwill impairment charge of $1.8 million impacting operating
margin by 190 basis points. In the fourth quarter of 2015 there was a
non-cash pension settlement charge totaling 50 basis points which did
not recur in the same period in 2016.

Net income was $5.1 million during the fourth quarter of 2016 compared
to $5.3 million in the fourth quarter of 2015 and earnings per share
were $0.19 and $0.21 for the respective periods. A non-cash goodwill
impairment charge decreased the fourth quarter of 2016 earnings by $0.05
per share. Conversely, a LIFO inventory adjustment increased the fourth
quarter of 2016 earnings by $0.01 per share and a non-cash pension
settlement charge reduced the fourth quarter of 2015 earnings by $0.01
per share.

Gross profit was $92.0 million for the year ended December 31, 2016,
resulting in gross margin of 24.1%, compared to gross profit of $92.6
million and gross margin of 22.8% for 2015. The gross margin increase
was due principally to favorable sales mix changes, most notably within
the municipal market, a LIFO inventory adjustment of 50 basis points and
a non-cash pension settlement charge of 60 basis points in 2015 which
did not recur in 2016.

Operating income was $35.7 million, resulting in operating margin of
9.3% for the year ended December 31, 2016, compared to operating income
of $36.4 million and operating margin of 9.0% for 2015. The change in
operating margin was impacted by a non-cash goodwill impairment charge
in 2016 of 50 basis points and lower leverage due to sales volume
decreases, offset by a LIFO inventory adjustment of 50 basis points and
a non-cash pension settlement charge totaling 90 basis points in 2015
which did not recur in 2016.

Net income was $24.9 million for the year ended December 31, 2016
compared to $25.1 million for 2015 and earnings per share were $0.95 and
$0.96 for the respective periods. The non-cash goodwill impairment
charge decreased 2016 earnings by $0.05 per share. However, the change
in LIFO inventory adjustment between years increased 2016 earnings by
$0.04 per share. In addition, a non-cash pension settlement charge
reduced 2015 earnings by $0.10 per share.

The Company’s backlog of orders was $98.8 million at December 31, 2016
compared to $117.1 million at December 31, 2015. Excluding the PCCP
project in 2016 and 2015, the backlog at December 31, 2016 was down 7.9%
as compared to December 31, 2015. In addition to the impact of PCCP,
backlog has been impacted by lower orders in the petroleum and fire
protection markets. Encouragingly, the municipal wastewater sector
continues to be gaining momentum as incoming orders have increased as
compared to the third quarter of 2016 and the year 2015.

The Company generated $53.4 million of operating cash flow during 2016
and continues to have a strong and flexible balance sheet. Cash and cash
equivalents totaled $57.6 million at December 31, 2016 and working
capital increased $8.6 million from December 31, 2015 to $154.5 million
at December 31, 2016. The increase in working capital was due
principally to higher cash balances partially offset by lower
inventories and increased accrued commissions and customer deposits. Net
capital expenditures for 2016 of $6.9 million consisted primarily of
machinery and equipment, a new operations facility in Africa, and other
building improvements. Capital additions for 2017 are presently planned
to be in the range of $8-$10 million and are expected to be financed
through internally-generated funds. The Company had no bank debt as of
December 31, 2016.

Jeffrey S. Gorman, President and CEO commented, “Although headwinds may
remain for the agricultural and export markets for 2017, we are hopeful
that capital spending in the oil and gas markets may have reached bottom
and should begin to increase. We are also encouraged by the new federal
administration’s attention to increased spending for water and
wastewater infrastructure, military growth and renewed pipeline
projects. Along with the administration’s focus on U.S. manufacturing,
these initiatives could be positive for Gorman-Rupp as the majority of
our products continue to be manufactured domestically. Our underlying
fundamentals remain strong and we remain well positioned to drive
long-term growth.”

Safe Harbor Statement

In connection with the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, The Gorman-Rupp Company
provides the following cautionary statement: This news release contains
various forward-looking statements based on assumptions concerning The
Gorman-Rupp Company’s operations, future results and prospects. These
forward-looking statements are based on current expectations about
important economic, political, and technological factors, among others,
and are subject to risks and uncertainties, which could cause the actual
results or events to differ materially from those set forth in or
implied by the forward-looking statements and related assumptions. Such
factors include, but are not limited to: (1) continuation of the current
and projected future business environment; (2) highly competitive
markets; (3) availability of raw materials; (4) loss of key management;
(5) cyber security threats; (6) acquisition performance and integration;
(7) compliance with, and costs related to, a variety of import and
export laws and regulations; (8) environmental compliance costs and
liabilities; (9) exposure to fluctuations in foreign currency exchange
rates; (10) conditions in foreign countries in which The Gorman-Rupp
Company conducts business; (11) impairment in the value of intangible
assets, including goodwill; (12) defined benefit pension plan settlement
expense; (13) family ownership of common equity; and (14) risks
described from time to time in our reports filed with the Securities and
Exchange Commission. Except to the extent required by law, we do not
undertake and specifically decline any obligation to review or update
any forward-looking statements or to publicly announce the results of
any revisions to any of such statements to reflect future events or
developments or otherwise.

Brigette A. Burnell
Corporate Secretary
The Gorman-Rupp Company
Telephone
(419) 755-1246
NYSE MKT: GRC

For additional information, contact James C. Kerr, Chief Financial
Officer, Telephone (419) 755-1548.

The Gorman-Rupp Company is a leading designer, manufacturer and
international marketer of pumps and pump systems for use in diverse
water, wastewater, construction, dewatering, industrial, petroleum,
original equipment, agriculture, fire protection, heating, ventilating
and air conditioning (HVAC), military and other liquid-handling
applications.

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