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What changed in GORMAN RUPP CO's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of GORMAN RUPP CO's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+132 added−135 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-26)

Top changes in GORMAN RUPP CO's 2024 10-K

132 paragraphs added · 135 removed · 105 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

34 edited+10 added−7 removed29 unchanged
Biggest changeCompetitors and others may also challenge the validity of the Company’s intellectual property or allege that it has infringed their intellectual property, including through litigation. The Company may be required to pay substantial damages if it is determined its products infringe the intellectual property of others.
Biggest changeIf the Company is unable to adequately enforce and protect its intellectual property rights, it could adversely affect its revenues and profits and hamper its ability to grow. Competitors and others may also challenge the validity of the Company’s intellectual property or allege that it has infringed their intellectual property, including through litigation.
The GR Plan allows eligible retiring employees to receive a lump-sum distribution for benefits earned in lieu of annual payments and most of the Company’s retirees historically have elected this option.
The GR Plan allows eligible retiring employees to receive a lump-sum distribution for benefits earned in lieu of annual payments and most of the Company’s eligible retirees historically have elected this option.
These considerations may also impact the operations of the Company’s suppliers, who may seek to pass along any increased costs to the Company. Inflationary economic conditions may further increase these various costs. The Company may not be able to pass along any increased material or labor costs to customers for competitive or other reasons.
These considerations may also impact the operations of the Company’s suppliers, who may seek to pass along any increased costs to the Company. Inflationary economic conditions and tariffs may further increase these various costs. The Company may not be able to pass along any increased material or labor costs to customers for competitive or other reasons.
The indebtedness could have important negative consequences, including: ● higher borrowing costs resulting from fluctuations in our variable benchmark borrowing rates that have adversely affected, and could in the future adversely affect, our interest rates; ● reduced availability of cash for the Company’s operations and other business activities after satisfying interest payments and other requirements under the terms of its debt instruments; ● less flexibility to plan for or react to competitive challenges, and a competitive disadvantage relative to competitors that do not have as much indebtedness; ● difficulty in obtaining additional financing in the future; ● inability to comply with covenants in, and potential for default under, the Company’s debt instruments; ● inability to operate our business or to take advantage of business opportunities due to restrictions created from the debt covenants; and ● challenges to repaying or refinancing any of the Company’s debt.
The indebtedness could have important negative consequences, including: ● higher borrowing costs resulting from fluctuations in our variable benchmark borrowing rates that have adversely affected, and could in the future adversely affect, our interest rates; ● reduced availability of cash for the Company’s operations and other business activities after satisfying interest payments and other requirements under the terms of its debt instruments; ● less flexibility to plan for or react to competitive challenges, and a competitive disadvantage relative to competitors that do not have as much indebtedness; ● limiting the Company’s ability to undertake mergers or dispositions of assets, or pay dividends; ● difficulty in obtaining additional financing in the future; ● inability to comply with covenants in, and potential for default under, the Company’s debt instruments; ● inability to operate our business or to take advantage of business opportunities due to restrictions created from the debt covenants; and ● challenges to repaying or refinancing any of the Company’s debt.
Any of these events could have an adverse impact on the Company’s business and operations. Changes in our tax rates and exposure to additional income tax liabilities Gorman-Rupp is subject to income and other taxes in the United States federal jurisdiction and various local, state and foreign jurisdictions.
Any of these events or those referenced above could have an adverse impact on the Company’s business and operations. Changes in our tax rates and exposure to additional income tax liabilities Gorman-Rupp is subject to income and other taxes in the United States federal jurisdiction and various local, state and foreign jurisdictions.
Any of these developments may negatively impact the Company’s sales. Highly competitive markets Gorman-Rupp sells its products in highly competitive markets. Maintaining and improving the Company’s competitive position requires periodic investment in manufacturing, engineering, quality standards, marketing, customer service and support, and distribution networks. Even with such investment, the Company may not be successful in maintaining its competitive position.
Highly competitive markets Gorman-Rupp sells its products in highly competitive markets. Maintaining and improving the Company’s competitive position requires periodic investment in manufacturing, engineering, quality standards, marketing, customer service and support, and distribution networks. Even with such investment, the Company may not be successful in maintaining its competitive position.
We are required to maintain sufficient inventories to accommodate the needs of our customers, often with short lead times. Our business could be adversely affected if we fail to source and maintain adequate inventory levels. Raw material and energy expenses are substantial drivers of costs in the manufacture of pumps and changes in these costs are often unpredictable.
Our business could be adversely affected if we fail to source and maintain adequate inventory levels. Raw material and energy expenses are substantial drivers of costs in the manufacture of pumps and changes in these costs are often unpredictable.
Repayment of these postponed taxes will reduce the amount of cash that we would have available to fund our operations, working capital, capital expenditures, acquisitions, or general corporate or other business activities.
Repayment of these postponed taxes will reduce the amount of cash that we would have available to fund our operations, working capital, capital expenditures, acquisitions, or general corporate or other business activities. This could materially and adversely affect our business, financial condition and results of operations.
The Company’s sales from international operations and export sales, and the availability and prices of certain raw materials, parts, and components, are subject, in varying degrees, to risks inherent to doing business outside the United States.
The Company expects its international and export sales to continue to be a significant portion of its revenue. The Company’s sales from international operations and export sales, and the availability and prices of certain raw materials, parts, and components, are subject, in varying degrees, to risks inherent to doing business outside the United States.
If these audits result in assessments different from amounts recorded, the Company’s future financial results may include unfavorable adjustments. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If these audits result in assessments different from amounts recorded, the Company’s future financial results may include unfavorable adjustments.
The Company may also be required to develop an alternative, non-infringing product that could be costly and time-consuming, or acquire a license (if available) on terms that are not favorable to it.
The Company may be required to pay substantial damages if it is determined its products infringe the intellectual property of others. The Company may also be required to develop an alternative, non-infringing product that could be costly and time-consuming, or acquire a license (if available) on terms that are not favorable to it.
Such indebtedness includes senior secured first lien credit facilities comprised of a $350 million term loan facility and a $100 million revolving credit facility, and an unsecured senior subordinated term loan facility in an aggregate principal amount of $90 million.
Such indebtedness includes senior secured first lien credit facilities comprised of a $370 million term loan facility and a $100 million revolving credit facility, and a $30 million in aggregate principal amount of 6.40% senior secured notes.
If inflation causes the Producer Price Index for Machinery and Equipment – Pumps, Compressors and Equipment to increase in future periods, the LIFO reserve will increase with a corresponding increase to non-cash LIFO expense which may negatively impact the Company’s operating results. 9 In 2023, 2022, and 2021, the Company recorded pre-tax non-cash LIFO expense of $6.9 million, $18.0 million, and $6.7 million, respectively.
If inflation causes the Producer Price Index for Machinery and Equipment – Pumps, Compressors and Equipment to increase in future periods, the LIFO reserve will increase with a corresponding increase to non-cash LIFO expense which may negatively impact the Company’s operating results.
Any significant change in the value of these currencies could affect the Company’s ability to sell products competitively and control its cost structure, which could have a material effect on its financial condition, results of operations or cash flows.
Any significant change in the value of these currencies could affect the Company’s ability to sell products competitively and control its cost structure, which could have a material effect on its financial condition, results of operations or cash flows. 11 Conditions in foreign countries in which the Company conducts business In 2024, 25% of the Company’s net sales were to customers outside the United States.
The Company has been required to make such adjustments in prior periods, and, if such non-cash adjustments are necessary in future periods, they may negatively impact the Company’s operating results. There was no pension settlement charge recorded in 2023.
The Company has been required to make such adjustments in prior periods, and, if such non-cash adjustments are necessary in future periods, they may negatively impact the Company’s operating results. There was no pension settlement charge recorded in 2024 or 2023. In 2022, the Company recorded pre-tax non-cash pension settlement charges of $6.4 million, driven by lump-sum distributions discussed above.
LIFO inventory method The majority of the Company’s inventories are valued on the last-in, first-out (LIFO) method and stated at the lower of cost or market. Current cost approximates replacement cost, or market, and LIFO cost is determined at the end of each fiscal year based on inventory levels on-hand at current replacement cost and a LIFO reserve.
Current cost approximates replacement cost, or market, and LIFO cost is determined at the end of each fiscal year based on inventory levels on-hand at current replacement cost and a LIFO reserve.
Moreover, environmental and sustainability initiatives, practices, rules and regulations are under increasing scrutiny of both governmental and non-governmental bodies and may require changes to the Company’s operational practices, standards and expectations and, in turn, increase the Company’s compliance costs. Periodically, the Company has incurred, and it expects to continue to incur, operating and capital costs to comply with environmental requirements.
Moreover, environmental and sustainability initiatives, practices, rules and regulations are under increasing scrutiny of both governmental and non-governmental bodies and may compel the Company to implement changes to its operational practices, standards and expectations and, in turn, increase the Company’s compliance costs.
From time-to-time, discussions regarding changes in U.S. tax laws have included the potential of LIFO being repealed. Should LIFO be repealed, the $20.0 million of postponed taxes, plus any future benefit realized prior to the date of repeal, would likely have to be repaid over some period of time.
Should LIFO be repealed, the $21.0 million of postponed taxes, plus any future benefit realized prior to the date of repeal, would likely have to be repaid over some period of time.
This could materially and adversely affect our business, financial condition and results of operations, Family ownership of common equity A substantial percentage of the Company’s common shares is held by various members of the Gorman family and their respective affiliates.
Family ownership of common equity A substantial percentage of the Company’s common shares is held by various members of the Gorman family and their respective affiliates.
The success of past and future acquisitions is dependent on the Company’s ability to successfully integrate acquired and existing operations. If the Company is unable to integrate acquisitions successfully, its financial results could suffer.
Acquisition performance and integration The Company has historically made strategic acquisitions of businesses and may do so in the future in support of its strategy. The success of past and future acquisitions is dependent on the Company’s ability to successfully integrate acquired and existing operations. If the Company is unable to integrate acquisitions successfully, its financial results could suffer.
Failure to retain key management personnel and attract and retain other highly-skilled personnel could limit the Company’s global growth and ability to execute operational initiatives, or may result in inefficient and ineffective management and operations, which could harm the Company’s revenues, operations and product development efforts and could eventually result in a decrease in profitability. 7 Intellectual property security The Company possesses a wide array of intellectual property rights, including patents, trademarks, copyrights, and applications for the above, as well as other proprietary information.
Failure to retain key management personnel and attract and retain other highly-skilled personnel could limit the Company’s global growth and ability to execute operational initiatives, or may result in inefficient and ineffective management and operations, which could harm the Company’s revenues, operations and product development efforts and could eventually result in a decrease in profitability.
Additional potential risks associated with acquisitions are the diversion of management’s attention from other business concerns, additional debt leverage, the loss of key employees and customers of the acquired business, the assumption of unknown liabilities, disputes with sellers, and the inherent risk associated with the Company entering new lines of business.
Additional potential risks associated with acquisitions are the diversion of management’s attention from other business concerns, additional debt leverage, the loss of key employees and customers of the acquired business, the assumption of unknown liabilities, disputes with sellers, and the inherent risk associated with the Company entering new lines of business. 8 Impairment in the value of intangible assets, including goodwill The Company’s total assets reflect goodwill from acquisitions, representing the excess cost over the fair value of the identifiable net assets acquired, including other indefinite-lived and finite-lived intangible assets.
The Company monitors its environmental responsibilities, together with trends in the related laws, and believes it is in substantial compliance with current regulations.
Periodically, the Company has incurred, and it expects to continue to incur, operating and capital costs to comply with environmental requirements. The Company monitors its environmental responsibilities, together with trends in the related laws, and believes it is in substantial compliance with current regulations.
As a result, prevailing economic conditions and financial, business, legal and regulatory and other factors, many of which are beyond the Company’s control, may affect its ability to make payments on its debt and other obligations. 8 Acquisition performance and integration The Company has historically made strategic acquisitions of businesses and may do so in the future in support of its strategy.
The Company’s ability to satisfy its debt and other obligations will depend principally upon its future operating performance. As a result, prevailing economic conditions and financial, business, legal and regulatory and other factors, many of which are beyond the Company’s control, may affect its ability to make payments on its debt and other obligations.
If any one or more of the Company’s significant shareholders were to sell all or a portion of their holdings of Company common shares at once or within short periods of time, or there was an expectation that such a sale was imminent, then the market price of the Company’s common shares could be negatively affected.
If any one or more of the Company’s significant shareholders were to sell all or a portion of their holdings of Company common shares at once or within short periods of time, or there was an expectation that such a sale was imminent, then the market price of the Company’s common shares could be negatively affected. 9 GENERAL RISK FACTORS Continuation of current and projected future business environment The overall pump industry is cyclical in nature, and some of its business activity is related to general business conditions in the durable goods and capital equipment markets.
A change in the availability of, or increases in the costs associated with raw materials, parts and components or labor and workforce could affect our ability to fulfill our customer backlog and materially affect our business, financial condition, results of operations or cash flows.
A change in the availability of, or increases in the costs associated with raw materials, parts and components or labor and workforce could affect our ability to fulfill our customer backlog and materially affect our business, financial condition, results of operations or cash flows. 10 Cybersecurity threats Increased global information technology security threats and more sophisticated and targeted computer crime pose a risk to the security of Gorman-Rupp’s systems and networks and to the confidentiality, availability, and integrity of its data.
The ability to protect and enforce intellectual property rights varies across jurisdictions. Competitors who attempt to copy the Company’s products, technologies or industrial designs are becoming more prevalent, particularly in Asia. If the Company is unable to adequately enforce and protect its intellectual property rights, it could adversely affect its revenues and profits and hamper its ability to grow.
The ability to protect and enforce intellectual property rights varies across jurisdictions. Competitors have attempted, and may in the future attempt to copy the Company’s products, technologies or industrial designs are becoming more prevalent, particularly in Asia.
Regardless of whether infringement claims against the Company are successful, defending against such claims could significantly increase the Company’s costs, divert management’s time and attention away from other business matters, and otherwise adversely affect the Company’s results of operations and financial condition.
Regardless of whether infringement claims against the Company are successful, defending against such claims could significantly increase the Company’s costs, divert management’s time and attention away from other business matters, and otherwise adversely affect the Company’s results of operations and financial condition. 7 Growth through Acquisitions The Company’s historical growth has depended, and its future growth is likely to continue to depend, in part on its acquisition strategy and the successful integration of acquired businesses into existing operations.
The Company may not be able to compete successfully with its existing competitors or with new competitors.
The Company may not be able to compete successfully with its existing competitors or with new competitors. Failure to compete successfully could negatively impact the Company’s sales, operating margins and overall financial performance.
If the Company is required to incur increased compliance costs or violates environmental laws or regulations, future environmental compliance expenditures or liabilities could have a material adverse effect on our financial condition, results of operations or cash flows. 11 Exposure to fluctuations in foreign currency exchange rates The Company is exposed to fluctuations in foreign currency exchange rates, particularly with respect to the Euro, Canadian Dollar, South African Rand and British Pound.
If the Company incurs increased compliance costs or violates environmental laws or regulations, future environmental compliance expenditures or liabilities could have a material adverse effect on our financial condition, results of operations or cash flows.
Failure to compete successfully could negatively impact the Company’s sales, operating margins and overall financial performance. 10 Availability and costs of raw materials and labor The Company could be adversely affected by raw material price volatility or an inability of its suppliers to meet quality and delivery requirements.
Availability and costs of raw materials and labor The Company could be adversely affected by raw material price volatility or an inability of its suppliers to meet quality and delivery requirements. We are required to maintain sufficient inventories to accommodate the needs of our customers, often with short lead times.
See Note 4 to the Consolidated Financial Statements, Inventories. As of December 31, 2023 we had a LIFO reserve of $95.1 million, which at the current U.S. Corporate tax rate, represents approximately $20.0 million of income taxes, payment of which is delayed to future dates based upon changes in inventory costs.
Corporate tax rate, represents approximately $21.0 million of income taxes, payment of which is delayed to future dates based upon changes in inventory costs. From time-to-time, discussions regarding changes in U.S. tax laws have included the potential of LIFO being repealed.
Growth through Acquisitions The Company’s historical growth has depended, and its future growth is likely to continue to depend, in part on its acquisition strategy and the successful integration of acquired businesses into existing operations. The Company intends to continue to seek additional domestic and international acquisition opportunities that have the potential to support and strengthen its operations.
The Company intends to continue to seek additional domestic and international acquisition opportunities that have the potential to support and strengthen its operations.
In 2022 and 2021, the Company recorded pre-tax non-cash pension settlement charges of $6.4 million and $2.3 million, respectively, driven by lump-sum distributions discussed above. See Note 9 to the Consolidated Financial Statements, Pensions and Other Postretirement Benefits.
In 2024, 2023, and 2022, the Company recorded pre-tax non-cash LIFO expense of $5.1 million, $6.9 million, and $18.0 million, respectively. See Note 4 to the Consolidated Financial Statements, Inventories. As of December 31, 2024 the Company had a LIFO reserve of $100.2 million, which at the current U.S.
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The Company’s ability to satisfy its debt and other obligations will depend principally upon its future operating performance.
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Intellectual property security The Company possesses a wide array of intellectual property rights, including patents, trademarks, copyrights, and applications for the above, as well as other proprietary information.
Removed
The anticipated benefits from the Fill-Rite transaction may not be realized The Company may not realize the full benefits of the increased sales volume and other benefits that are currently expected to result from the Fill-Rite transaction, or realize these benefits within the time frame that is currently expected.
Added
See Note 9 to the Consolidated Financial Statements, Pensions and Other Postretirement Benefits. LIFO inventory method The majority of the Company’s inventories are valued on the last-in, first-out (LIFO) method and stated at the lower of cost or market.
Removed
In addition, the benefits of the Fill-Rite transaction may be offset by operating losses relating to changes in material or energy prices, inflationary economic conditions, increased competition, or by other risks and uncertainties. If the Company fails to realize the benefits it anticipates from the Fill-Rite transaction, the Company’s results of operations may be adversely affected.
Added
Any of these developments may negatively impact the Company’s sales. The effects of recent executive actions and executive orders by the President in connection with, among other areas, energy production, trade, immigration and administrative agencies, as well as any tandem regulatory changes pursued by the current administration, are highly uncertain and may adversely impact our business.
Removed
Impairment in the value of intangible assets, including goodwill The Company’s total assets reflect goodwill from acquisitions, representing the excess cost over the fair value of the identifiable net assets acquired, including other indefinite-lived and finite-lived intangible assets.
Added
The effects of international trade conflicts between the U.S. and its global trade partners including, without limitation, China, Mexico and Canada, may have an adverse impact on economic conditions, and commodity and raw materials pricing and availability.
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GENERAL RISK FACTORS Continuation of current and projected future business environment The overall pump industry is cyclical in nature, and some of its business activity is related to general business conditions in the durable goods and capital equipment markets.
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Artificial intelligence presents risks and challenges that can impact our business Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability or other adverse consequences to our business operations. As with many technological innovations, artificial intelligence presents risks and challenges that could impact our business.
Removed
Cybersecurity threats Increased global information technology security threats and more sophisticated and targeted computer crime pose a risk to the security of Gorman-Rupp’s systems and networks and to the confidentiality, availability, and integrity of its data.
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We work with vendors that incorporate artificial intelligence tools into their offerings and the providers of these artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience.
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Conditions in foreign countries in which the Company conducts business In 2023, 25% of the Company’s net sales were to customers outside the United States. The Company expects its international and export sales to continue to be a significant portion of its revenue.
Added
If we, our vendors, or our third-party partners experience an actual or perceived breach or privacy or security incident because of the use of generative artificial intelligence, we may lose valuable intellectual property and confidential information and our reputation and the public perception of the effectiveness of our security measures could be harmed.
Added
Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property. Any of these outcomes could damage our reputation, result in the loss of valuable property and information and adversely impact our business.
Added
Exposure to fluctuations in foreign currency exchange rates The Company is exposed to fluctuations in foreign currency exchange rates, particularly with respect to the Euro, Canadian Dollar, South African Rand and British Pound.
Added
In particular, the effects on the global economy from international trade conflicts between the U.S. and its global trade partners including, without limitation, China, Mexico and Canada, and any escalation or broadening of armed conflicts in Ukraine and the Middle East, including attacks on shipping vessels in key shipping routes, are uncertain.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition to the employee training program, the Company has created an information security incident response policy and team. The risks related to cybersecurity, including the effectiveness of our training programs, are monitored on an ongoing basis by our information technology department and external service providers.
Biggest changeThe risks related to cybersecurity, including the effectiveness of our training programs, are monitored on an ongoing basis by our information technology department and external service providers. In addition, to assess the incident response policy, annually the Company conducts cybersecurity incident response training exercises to evaluate the effectiveness of the Company’s cybersecurity incident response strategies and tactics.
Recognizing the complexity and evolving nature of cybersecurity threats, Gorman-Rupp engages with a range of external experts, including cybersecurity assessors, consultants, and auditors, in evaluating and testing our risk management systems.
The Company recognizes the complexity and evolving nature of cybersecurity threats. The Company utilizes a number of third-party software solutions, including full-time external monitoring, that are intended to detect and prevent potential cybersecurity threats. In addition, Gorman-Rupp engages with a range of external experts, including cybersecurity assessors, consultants, and auditors, in evaluating and testing our risk management systems.
Our information technology department works closely with our senior management team to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs. 12 The Company provides training to all employees that reinforces the Company’s information technology risk and security management policies, standards and practices, as well as the expectation that employees comply with these policies.
Employees within the information technology department that are focused on cybersecurity attend periodic external training to stay current on potential cybersecurity risks and threats and how to best protect the Company from these risks and threats. 12 The Company provides training to all employees that reinforces the Company’s information technology risk and security management policies, standards and practices, as well as the expectation that employees comply with these policies.
This integration ensures that cybersecurity considerations are an integral part of our decision-making processes and operational practices.
This integration ensures that cybersecurity considerations are an integral part of our decision-making processes and operational practices. Our information technology department, including employees dedicated to the area of cybersecurity risk management, works closely with our senior management team to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.
Removed
In addition, to assess the incident response policy, periodically the Company engages a third-party expert to oversee a cybersecurity incident response training exercise and to facilitate group discussions regarding the effectiveness of the Company’s cybersecurity incident response strategies and tactics.
Added
In addition to the employee training program, the Company has created an information security incident response policy and team. The response team includes the Executive Officers of the Company, the Vice President of Information Technology, the Manager of IT Security, the Vice President of Human Resources and other functional and operational area experts as needed.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe the quality and production capacity of our facilities is sufficient to maintain our competitive position for the foreseeable future. 13 Properties Approximate Sq Footage Principal Use Markets Served Owned/ Leased Utilization United States Bellville, OH 98,000 Manufacturing, R&D Industrial, OEM Owned Partial Fort Wayne, IN 125,000 Manufacturing, R&D Industrial, agriculture, construction Owned Partial Glendale, AZ 32,000 Manufacturing, R&D Industrial, agriculture, municipal, pretroleum, OEM Owned Partial Lenexa, KS 142,000 Manufacturing Industrial, agriculture, construction Leased Partial Lubbock, TX 60,000 Manufacturing Industrial, agriculture, municipal, pretroleum, OEM Owned Partial Mansfield, OH (2 properties) 970,000 Corporate HQ, Manufacturing, R&D Industrial, construction, municipal, pretroleum, OEM Owned Partial Olive Branch, MS 62,000 Manufacturing Industrial, agriculture, municipal, pretroleum, OEM Owned Partial Royersford, PA (2 properties) 120,000 Manufacturing Industrial, agriculture, construction, municipal, OEM Owned Partial Toccoa, GA 295,000 Manufacturing, R&D Industrial, fire, municipal Owned Partial Other Countries County Westmeath, Ireland 42,000 Manufacturing Industrial, fire, municipal Owned Partial Waardenburg, The Netherlands 41,000 Manufacturing Industrial, agriculture, construction, municipal, pretroleum, OEM Owned Partial St.
Biggest changeWe believe the quality and production capacity of our facilities is sufficient to maintain our competitive position for the foreseeable future. 13 Properties Approximate Sq Footage Principal Use Markets Served Owned/ Leased Utilization United States Bellville, OH 98,000 Manufacturing, R&D Industrial, OEM Owned Partial Fort Wayne, IN 125,000 Manufacturing, R&D Industrial, agriculture, construction Owned Partial Glendale, AZ 32,000 Manufacturing, R&D Industrial, agriculture, municipal, petroleum, OEM Owned Partial Lenexa, KS 142,000 Manufacturing Industrial, agriculture, construction Leased Partial Lubbock, TX 60,000 Manufacturing Industrial, agriculture, municipal, petroleum, OEM Owned Partial Mansfield, OH (2 properties) 970,000 Corporate HQ, Manufacturing, R&D Industrial, construction, municipal, petroleum, OEM Owned Partial Olive Branch, MS 62,000 Manufacturing Industrial, agriculture, municipal, petroleum, OEM Owned Partial Royersford, PA (2 properties) 120,000 Manufacturing Industrial, agriculture, construction, municipal, OEM Owned Partial Toccoa, GA 295,000 Manufacturing, R&D Industrial, fire, municipal Owned Partial Other Countries County Westmeath, Ireland 42,000 Manufacturing Industrial, fire, municipal Owned Partial Waardenburg, The Netherlands 41,000 Manufacturing Industrial, agriculture, construction, municipal, petroleum, OEM Owned Partial St.
Thomas, Ontario, Canada 63,000 Manufacturing Industrial, agriculture, construction, municipal, pretroleum, OEM Owned Partial Johannesburg, South Africa 38,000 Manufacturing Industrial, agriculture, construction, municipal, pretroleum, OEM Owned Partial Namur, Belgium 18,000 Manufacturing Industrial, agriculture, construction, municipal, pretroleum, OEM Owned Partial
Thomas, Ontario, Canada 63,000 Manufacturing Industrial, agriculture, construction, municipal, petroleum, OEM Owned Partial Johannesburg, South Africa 38,000 Manufacturing Industrial, agriculture, construction, municipal, petroleum, OEM Owned Partial Namur, Belgium 18,000 Manufacturing Industrial, agriculture, construction, municipal, petroleum, OEM Owned Partial

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeKing also previously served as Vice President of Operations effective March 1, 2018 and as Vice President from April 1, 2017 to February 28, 2018. Mr.
Biggest changeKing served as President and Chief Operating Officer since January 1, 2021 after previously serving as Vice President and Chief Operating Officer since April 25, 2019. Mr. King also previously served as Vice President of Operations effective March 1, 2018 and as Vice President from April 1, 2017 to February 28, 2018. Mr.
Burnell served as Corporate Counsel of Red Capital Group from 2011 to 2013 and as an Associate at Jones Day from 2002 to 2011. 15 PART II
Burnell served as Corporate Counsel of Red Capital Group from 2011 to 2013 and as an Associate at Jones Day from 2002 to 2011. PART II
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table sets forth certain information with respect to the executive officers of the Company as of January 31, 2024: Name Age Office Date Elected to Executive Office Position Jeffrey S. Gorman 71 Executive Chairman 1998 Scott A.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Jeffrey S. Gorman transitioned from Executive Chairman to Chairman on January 3, 2025. The following table sets forth certain information with respect to the executive officers of the Company as of January 31, 2025: Name Age Office Date Elected to Executive Office Position Scott A.
King 49 President and Chief Executive Officer 2019 James C. Kerr 61 Executive Vice President and Chief Financial Officer 2017 Brigette A. Burnell 48 Executive Vice President, General Counsel and Corporate Secretary 2014 Mr.
King 50 President and Chief Executive Officer 2019 James C. Kerr 62 Executive Vice President and Chief Financial Officer 2017 Brigette A. Burnell 49 Executive Vice President, General Counsel and Corporate Secretary 2014 Mr. King was elected Chief Executive Officer effective January 1, 2022 in addition to his role as President. Mr.
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Gorman was elected Executive Chairman effective January 1, 2022 after previously serving as Chairman of the Board since April 25, 2019, Chief Executive Officer from May 1, 1998 to December 31, 2021 and as President from 1998 to 2020 after having served as Senior Vice President since 1996. Mr.
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Gorman also held the position of General Manager of the Gorman-Rupp Pumps USA division from 1989 through 2005. He served as Assistant General Manager from 1986 to 1988; and he held the office of Corporate Secretary from 1982 to 1990. He has served as a Director of the Company continuously since 1989. Mr.
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King was elected Chief Executive Officer effective January 1, 2022 in addition to his role as President. Mr. King served as President and Chief Operating Officer since January 1, 2021 after previously serving as Vice President and Chief Operating Officer since April 25, 2019. Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis graph is not deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the graph shall not be deemed to be incorporated by reference into any prior or subsequent filing by us under the Securities Act of 1933, as amended, or the Exchange Act. 2018 2019 2020 2021 2022 2023 The Gorman-Rupp Company 100.00 117.66 103.69 144.85 85.19 121.06 NYSE Composite 100.00 125.74 134.53 162.35 147.17 167.44 NYSE American 100.00 113.72 105.18 152.68 184.22 204.67 SIC Code 3561 100.00 130.86 154.18 180.36 164.11 188.23 16 PURCHASES OF EQUITY SECURITIES (Amounts in tables in thousands of dollars, except share and per share data) On October 29, 2021, the Company announced a share repurchase program of up to $50.0 million of the Company’s common shares.
Biggest changeThis graph is not deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the graph shall not be deemed to be incorporated by reference into any prior or subsequent filing by us under the Securities Act of 1933, as amended, or the Exchange Act. 2019 2020 2021 2022 2023 2024 The Gorman-Rupp Company 100.00 88.13 123.11 72.40 102.89 111.97 NYSE Composite 100.00 106.99 129.12 117.04 133.16 154.20 NYSE American 100.00 92.49 134.26 162.00 179.98 183.58 SIC Code 3561 100.00 117.82 137.83 125.41 143.84 152.38 16 PURCHASES OF EQUITY SECURITIES (Amounts in tables in thousands of dollars, except share and per share data) On October 29, 2021, the Company announced a share repurchase program of up to $50.0 million of the Company’s common shares.
Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Approximate dollar value of shares that may yet be purchased under the program October 1 to October 31, 2023 - - - $ 48,067 November 1 to November 30, 2023 - - - 48,067 December 1 to December 31, 2023 - - - 48,067 Total - - - $ 48,067
Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Approximate dollar value of shares that may yet be purchased under the program October 1 to October 31, 2024 - - - $ 48,067 November 1 to November 30, 2024 - - - 48,067 December 1 to December 31, 2024 - - - 48,067 Total - - - $ 48,067
PERFORMANCE GRAPH The following stock price performance graph and related table compares the cumulative total returns (assuming reinvestment of dividends) on $100 invested on December 31, 2018 through December 31, 2023 in the Company’s common shares, the NYSE Composite Index, the NYSE American Index and a peer group of companies in the SIC Code 3561 Index — Pumps and Pumping Equipment.
PERFORMANCE GRAPH The following stock price performance graph and related table compares the cumulative total returns (assuming reinvestment of dividends) on $100 invested on December 31, 2019 through December 31, 2024 in the Company’s common shares, the NYSE Composite Index, the NYSE American Index and a peer group of companies in the SIC Code 3561 Index — Pumps and Pumping Equipment.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s Common Stock is listed on the New York Stock Exchange under the ticker symbol “GRC”. On February 1, 2024, there were 1,615 registered holders of the Company’s common shares.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s Common Stock is listed on the New York Stock Exchange under the ticker symbol “GRC”.
The Company currently expects to continue its exceptional history of paying regular quarterly dividends, and increased annual dividends. However, any future dividends will be reviewed individually and declared by our Board of Directors at its discretion, dependent on an assessment of the Company’s financial condition and business outlook at the applicable time.
However, any future dividends will be reviewed individually and declared by our Board of Directors at its discretion, dependent on an assessment of the Company’s financial condition and business outlook at the applicable time.
Added
On February 1, 2025, there were 1,534 registered holders of the Company’s common shares. 15 The Company currently expects to continue its exceptional history of paying regular quarterly dividends, and increased annual dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeProvided below is a reconciliation of adjusted earnings, adjusted earnings per share, and adjusted earnings before interest, taxes, depreciation and amortization. 21 2023 2022 2021 Adjusted earnings: Reported net income – GAAP basis $ 34,951 $ 11,195 $ 29,851 Pension settlement charge - 5,216 1,846 One-time acquisition costs - 5,752 - Amortization of step up in value of acquired inventories - 1,141 - Amortization of acquired customer backlog 863 1,231 - Non-GAAP adjusted earnings $ 35,814 $ 24,535 $ 31,697 2023 2022 2021 Adjusted earnings per share: Reported earnings per share - GAAP basis $ 1.34 $ 0.43 $ 1.14 Pension settlement charge - 0.20 0.07 One-time acquisition costs - 0.22 - Amortization of step up in value of acquired inventories - 0.04 - Amortization of acquired customer backlog 0.03 0.05 - Non-GAAP adjusted earnings per share $ 1.37 $ 0.94 $ 1.21 2023 2022 2021 Adjusted earnings before interest, taxes, depreciation and amortization: Reported net income - GAAP basis $ 34,951 $ 11,195 $ 29,851 Interest expense 41,273 19,240 1 Provision for income taxes 9,010 2,677 7,397 Depreciation and amortization 28,496 21,158 11,914 Non-GAAP earnings before interest, taxes, depreciation and amortization 113,730 54,270 49,163 Pension settlement charge - 6,427 2,304 One-time acqusition costs - 7,088 - Amortization of step up in value of acquired inventories - 1,406 - Amortization of acquired customer backlog 1,085 1,517 - Non-cash LIFO expense 6,891 18,041 6,669 Non-GAAP adjusted earnings before interest, taxes, depreciation and amortization $ 121,706 $ 88,749 $ 58,136 Liquidity and Capital Resources Our primary sources of liquidity are cash generated from operations and borrowings under our revolving credit facility.
Biggest changeProvided below is a reconciliation of adjusted earnings, adjusted earnings per share, and adjusted earnings before interest, taxes, depreciation and amortization. 2024 2023 2022 Adjusted earnings: Reported net income – GAAP basis $ 40,115 $ 34,951 $ 11,195 Pension settlement charge - - 5,216 One-time acquisition costs - - 5,752 Amortization of step up in value of acquired inventories - - 1,141 Amortization of acquired customer backlog - 863 1,231 Write-off of unamortized previously deferred debt financing fees 3,506 - - Refinancing costs 2,413 - - Non-GAAP adjusted earnings $ 46,034 $ 35,814 $ 24,535 2024 2023 2022 Adjusted earnings per share: Reported earnings per share - GAAP basis $ 1.53 $ 1.34 $ 0.43 Pension settlement charge - - 0.20 One-time acquisition costs - - 0.22 Amortization of step up in value of acquired inventories - - 0.04 Amortization of acquired customer backlog - 0.03 0.05 Write-off of unamortized previously deferred debt financing fees 0.13 - - Refinancing costs 0.09 - - Non-GAAP adjusted earnings per share $ 1.75 $ 1.37 $ 0.94 2024 2023 2022 Adjusted earnings before interest, taxes, depreciation and amortization: Reported net income - GAAP basis $ 40,115 $ 34,951 $ 11,195 Interest expense 33,621 41,273 19,240 Provision for income taxes 10,378 9,010 2,677 Depreciation and amortization 27,897 28,496 21,158 Non-GAAP earnings before interest, taxes, depreciation and amortization 112,011 113,730 54,270 Pension settlement charge - - 6,427 One-time acquisition costs - - 7,088 Amortization of step up in value of acquired inventories - - 1,406 Amortization of acquired customer backlog - 1,085 1,517 Write-off of unamortized previously deferred debt financing fees 4,438 - - Refinancing costs 3,055 - - Non-cash LIFO expense 5,142 6,891 18,041 Non-GAAP adjusted earnings before interest, taxes, depreciation and amortization $ 124,646 $ 121,706 $ 88,749 21 Liquidity and Capital Resources Our primary sources of liquidity are cash generated from operations and borrowings under our revolving credit facility.
We believe we have adequate liquidity from funds on hand and borrowing capacity to execute our financial and operating strategy, as well as comply with debt obligation and financial covenants for at least the next 12 months. The Company currently expects to continue its exceptional history of paying regular quarterly dividends and increased annual dividends.
We believe we have adequate liquidity from funds on hand and borrowing capacity to execute our financial and operating strategy, as well as comply with debt obligations and financial covenants for at least the next 12 months. The Company currently expects to continue its exceptional history of paying regular quarterly dividends and increased annual dividends.
The capital commitments do not represent the entire anticipated purchases in the future but represent only those substantive items for which the Company is contractually obligated as of December 31, 2023. Also, the Company has operating leases and financing leases for certain offices, manufacturing facilities, land, office equipment and automobiles.
The capital commitments do not represent the entire anticipated purchases in the future but represent only those substantive items for which the Company is contractually obligated as of December 31, 2024. Also, the Company has operating leases and financing leases for certain offices, manufacturing facilities, land, office equipment and automobiles.
Goodwill is adjusted for any changes to acquisition date fair value amounts made within the measurement period. Acquisition-related transaction costs are recognized separately from the business combination and expensed as incurred. See Note 2 to the Consolidated Financial Statements, “Acquisitions”.
Goodwill is adjusted for any changes to acquisition date fair value amounts made within the measurement period. Acquisition-related transaction costs are recognized separately from the business combination and expensed as incurred. See Note 2 to the Consolidated Financial Statements, Acquisitions.
The Company performed a quantitative impairment analysis as of October 1, 2023 for National and Fill-Rite reporting units and concluded that the fair value of each reporting unit exceeded its carrying value and therefore was not impaired.
The Company performed a quantitative impairment analysis as of October 1, 2024 for National and Fill-Rite reporting units and concluded that the fair value of each reporting unit exceeded its carrying value and therefore was not impaired.
The Company performed qualitative analyses as of October 1, 2023 and 2022 for all of its reporting units except for National Pump Company (“National”) in 2023 and 2022 and Fill-Rite in 2023 concluding that it was more likely than not that the fair value of the reporting units exceeded the respective carrying amounts.
The Company performed qualitative analyses as of October 1, 2024 and 2023 for all of its reporting units except for National Pump Company (“National”) and Fill-Rite, concluding that it was more likely than not that the fair value of the reporting units exceeded the respective carrying amounts.
Actual pension plan asset performance will either reduce or increase unamortized losses included in Accumulated other comprehensive loss, which will ultimately affect net income. The assumed rate of compensation increase was 3.5% in both 2023 and 2022. 25 Substantially all retirees elect to take lump sum settlements of their pension plan benefits.
Actual pension plan asset performance will either reduce or increase unamortized losses included in Accumulated other comprehensive loss, which will ultimately affect net income. The assumed rate of compensation increase was 3.5% in both 2024 and 2023. Substantially all eligible retirees elect to take lump sum settlements of their pension plan benefits.
The discount rates were determined by constructing a zero-coupon spot yield curve derived from a universe of high-quality bonds as of the measurement date. The expected rate of return on pension assets is designed to be a long-term assumption that will be subject to year-to-year variability. The rate for 2023 was 6.2% and for 2022 was 5.0%.
The discount rates were determined by constructing a zero-coupon spot yield curve derived from a universe of high-quality bonds as of the measurement date. The expected rate of return on pension assets is designed to be a long-term assumption that will be subject to year-to-year variability. The rate for 2024 was 7.2% and for 2023 was 6.2%.
During 2022, net cash used for investing activities of $545.7 million consisted primarily of $528.0 million for the acquisition of Fill-Rite and $18.0 million for capital expenditures largely related to machinery and equipment. During 2021, net cash used for investing activities of $9.2 million consisted primarily of capital expenditures of $9.8 million, largely related to machinery and equipment.
During 2023, net cash used for investing activities of $20.2 million consisted primarily of $20.8 million used for capital expenditures, largely related to machinery and equipment. During 2022, net cash used for investing activities of $545.7 million consisted primarily of $528.0 million for the acquisition of Fill-Rite and $18.0 million for capital expenditures, largely related to machinery and equipment.
The discount rates used to value pension plan obligations were 4.7% at December 31, 2023 and 4.9% at December 31, 2022, respectively. The discount rates used to value postretirement obligations were 4.9% at December 31, 2023 and 5.2% at December 31, 2022, respectively.
The discount rates used to value pension plan obligations were 5.3% at December 31, 2024 and 4.7% at December 31, 2023. The discount rates used to value postretirement obligations were 5.4% at December 31, 2024 and 4.9% at December 31, 2023.
See Note 10 to the Consolidated Financial Statements, “Goodwill and Other Intangible Assets”. 26 Other indefinite-lived intangible assets primarily consist of trademarks and trade names. The fair value of these assets is also tested annually for impairment as of October 1, or whenever events or changes in circumstances indicate there may be a possible permanent loss of value.
Other indefinite-lived intangible assets primarily consist of trademarks and trade names. The fair value of these assets is also tested annually for impairment as of October 1, or whenever events or changes in circumstances indicate there may be a possible permanent loss of value.
Adjusted earnings before interest, taxes, depreciation and amortization is net income (loss) excluding interest, taxes, depreciation and amortization, adjusted to exclude non-cash pension settlement charges, one-time acquisition costs, amortization of step up in value of acquired inventories, amortization of customer backlog, and non-cash LIFO expense.
Adjusted earnings before interest, taxes, depreciation and amortization is net income (loss) excluding interest, taxes, depreciation and amortization, adjusted to exclude non-cash pension settlement charges, one-time acquisition costs, amortization of step up in value of acquired inventories, amortization of customer backlog, write-off of unamortized previously deferred debt financing fees, refinancing costs, and non-cash LIFO expense.
During 2023, 2022 and 2021, the Company financed its capital improvements and working capital requirements principally through internally generated funds. The Company contributed $2.3 million to its defined benefit pension plans in 2023 and expects to contribute up to $3.0 million to its defined benefit pension plans in 2024.
During 2024, 2023 and 2022, the Company financed its capital improvements and working capital requirements principally through internally generated funds. The Company contributed $5.1 million to its defined benefit pension plans in 2024 and expects to contribute up to $2.9 million to its defined benefit pension plan in 2025.
Adjusted earnings per share is earnings per share excluding non-cash pension settlement charges per share, one-time acquisition costs per share, amortization of step up in value of acquired inventories per share, and amortization of customer backlog per share.
Adjusted earnings per share is earnings per share excluding non-cash pension settlement charges per share, one-time acquisition costs per share, amortization of step up in value of acquired inventories per share, amortization of customer backlog per share, write-off of unamortized previously deferred debt financing fees, and refinancing costs.
For customer contracts with multiple performance obligations, the Company allocates revenue to each performance obligation based on its relative standalone selling price, which is generally determined based on standalone selling prices charged to customers or using expected cost plus margin.
For customer contracts with multiple performance obligations, the Company allocates revenue to each performance obligation based on its relative standalone selling price, which is generally determined based on standalone selling prices charged to customers or using expected cost plus margin. 23 The transaction price for a customer contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the Company’s performance obligation is satisfied.
The fair value of these assets is determined using a royalty relief methodology similar to that employed when the associated assets were acquired, but using updated estimates of future sales, cash flows and profitability. For 2023 and 2022, the fair value of all indefinite lived intangible assets exceeded the respective carrying values.
The fair value of these assets is determined using a royalty relief methodology similar to that employed when the associated assets were acquired, but using updated estimates of future sales, cash flows and profitability.
Rental expenses relating to these leases were $2.8 million in 2023, $1.4 million in 2022, and $0.9 million in 2021.
Rental expenses relating to these leases were $3.6 million in 2024, $2.8 million in 2023, and $1.4 million in 2022.
Results of Operations – Year ended December 31, 2022 compared to year ended December 31, 2021: Information pertaining to fiscal year 2021 was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 beginning on page 15 under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2022.
We expect our effective tax rate for 2025 to be between 20.0% and 22.0%. 20 Results of Operations – Year ended December 31, 2023 compared to year ended December 31, 2022: Information pertaining to fiscal year 2022 was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 beginning on page 15 under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on March 8, 2023.
Finite-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recovered through future net cash flows generated by the assets.
For 2024 and 2023, the fair value of all indefinite lived intangible assets exceeded the respective carrying values. 25 Finite-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recovered through future net cash flows generated by the assets.
When interest rates are low, this subjects the Company to the risk of exceeding an actuarial threshold computed on an annual basis and triggering a GAAP-required non-cash pension settlement loss, which occurred in 2023 and 2022. The assumption used for the rate of increase in medical costs over the next five years was 5.0% in both 2023 and 2022.
When interest rates are low, this subjects the Company to the risk of exceeding an actuarial threshold computed on an annual basis and triggering a GAAP-required non-cash pension settlement loss, which occurred in 2022.
Goodwill relating to the National reporting unit is $13.6 million, or 1.5% of the Company’s December 31, 2023 total assets, and goodwill relating to the Fill-Rite reporting unit is $230.7 million, or 25.9% of the Company’s December 31, 2023 total assets.
Goodwill relating to the National reporting unit is $13.6 million, or 1.6% of the Company’s December 31, 2024 total assets, and goodwill relating to the Fill-Rite reporting unit is $230.7 million, or 26.9% of the Company’s December 31, 2024 total assets. See Note 10 to the Consolidated Financial Statements, Goodwill and Other Intangible Assets.
These consecutive years of increases continue to position Gorman-Rupp in the top 50 of all U.S. public companies with respect to number of years of increased dividend payments. The regular dividend yield at December 31, 2023 was 2.0%. The Company currently expects to continue its exceptional history of paying regular quarterly dividends and increased annual dividends.
During 2024, the Company again paid increased dividends and thereby attained its 52nd consecutive year of increased dividends. These consecutive years of increases continue to position Gorman-Rupp in the top 50 of all U.S. public companies with respect to number of years of increased dividend payments. The regular dividend yield at December 31, 2024 was 1.9%.
Partially offsetting these proceeds were debt issuance fees paid of $15.2 million, dividend payments of $17.9 million, payments on borrowings of $8.9 million and share repurchases of $0.9 million during 2022. During 2021, net cash used for financing activities of $18.6 million consisted primarily of dividend payments of $16.6 million and open market share repurchases of $1.2 million.
Partially offsetting these proceeds were debt issuance fees paid of $15.2 million, dividend payments of $17.9 million, payments on borrowings of $8.9 million and share repurchases of $0.9 million during 2022.
Capital expenditures in 2023 were $20.8 million and consisted primarily of machinery and equipment and building improvements. Capital expenditures for 2024, which are expected to consist principally of machinery and equipment purchases, are estimated to be in the range of $18 - $20 million and are expected to be financed through internally generated funds.
Capital expenditures in 2024 were $14.3 million and consisted primarily of machinery and equipment and building improvements. Capital expenditures for 2025, which are expected to consist principally of machinery and equipment purchases, are estimated to be approximately $20.0 million and are expected to be financed through cash from operations.
See Note 5 “Financing Arrangements” in the Notes to our Consolidated Financial Statements. 23 Maturities of long-term debt in the next five fiscal years, and the remaining years thereafter, are as follows: 2024 2025 2026 2027 2028 Total $ 21,875 $ 30,625 $ 35,000 $ 326,250 $ - $ 413,750 The Company was in compliance with its debt covenants, including limits on additional borrowings and maintenance of certain operating and financial ratios at December 31, 2023 and December 31, 2022.
Maturities of long-term debt in the next five fiscal years, and the remaining years thereafter, are as follows: 2025 2026 2027 2028 2029 Thereafter Total $ 18,500 $ 23,125 $ 32,375 $ 37,000 $ 229,750 $ 30,000 $ 370,750 22 The Company was in compliance with its debt covenants, including limits on additional borrowings and maintenance of certain operating and financial ratios at December 31, 2024 and December 31, 2023.
The following table summarizes the Company’s contractual obligations at December 31, 2023: Payment Due By Period Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Capital commitments $ 3,616 $ 3,616 $ - $ - $ - Leases 40,552 2,501 5,230 3,330 29,491 Total $ 44,168 $ 6,117 $ 5,230 $ 3,330 $ 29,491 Critical Accounting Policies The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States.
The following table summarizes the Company’s contractual obligations at December 31, 2024: Payment Due By Period Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Capital commitments $ 3,506 $ 3,161 $ 345 $ - $ - Leases 38,762 2,774 4,532 3,628 27,828 Total $ 42,268 $ 5,935 $ 4,877 $ 3,628 $ 27,828 Critical Accounting Policies The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States.
Cash and cash equivalents totaled $30.5 million at December 31, 2023. The Company had an additional $98.0 million available under the revolving credit facility after deducting $2.0 million in outstanding letters of credit primarily related to customer orders.
Cash and cash equivalents totaled $24.2 million at December 31, 2024. The Company had $98.9 million of borrowing capacity available under the revolving credit facility after deducting $1.1 million in outstanding letters of credit primarily related to customer orders. See Note 5 - Financing Arrangements in the Notes to our Consolidated Financial Statements.
Financial Cash Flow Year Ended December 31, 2023 2022 2021 Beginning of period cash and cash equivalents $ 6,783 $ 125,194 $ 108,203 Net cash provided by operating activities 98,225 13,685 45,438 Net cash used for investing activities (20,163 ) (545,673 ) (9,169 ) Net cash received from (used for) financing activities (54,527 ) 414,113 (18,553 ) Effect of exchange rate changes on cash 200 (536 ) (725 ) Net increase (decrease) in cash and cash equivalents 23,735 (118,411 ) 16,991 End of period cash and cash equivalents $ 30,518 $ 6,783 $ 125,194 The increase in cash provided by operating activities in 2023 compared to 2022 was primarily due to increased earnings before depreciation, amortization, and LIFO expense, and improved cash flow from working capital management.
Financial Cash Flow Year Ended December 31, 2024 2023 2022 Beginning of period cash and cash equivalents $ 30,518 $ 6,783 $ 125,194 Net cash provided by operating activities 69,830 98,225 13,685 Net cash used for investing activities (11,866 ) (20,163 ) (545,673 ) Net cash received from (used for) financing activities (63,137 ) (54,527 ) 414,113 Effect of exchange rate changes on cash (1,132 ) 200 (536 ) Net increase (decrease) in cash and cash equivalents (6,305 ) 23,735 (118,411 ) End of period cash and cash equivalents $ 24,213 $ 30,518 $ 6,783 The decrease in cash provided by operating activities in 2024 compared to 2023 was primarily due to the timing of deferred revenue and customer deposits and accrued liabilities and expenses.
Cost of Products Sold and Gross Profit 2023 2022 $ Change % Change Cost of products sold $ 463,258 $ 390,090 $ 73,168 18.8 % % of Net sales 70.2 % 74.9 % Gross margin 29.8 % 25.1 % Gross profit was $196.3 million for 2023, resulting in gross margin of 29.8%, compared to gross profit of $130.9 million and gross margin of 25.1% in 2022.
Cost of Products Sold and Gross Profit 2024 2023 $ Change % Change Cost of products sold $ 455,339 $ 463,258 $ (7,919 ) (1.7% ) % of Net sales 69.0 % 70.2 % Gross margin 31.0 % 29.8 % Gross profit was $204.3 million for 2024, resulting in gross margin of 31.0%, compared to gross profit of $196.3 million and gross margin of 29.8% in 2023.
See Note 5 “Financing Arrangements” in the Notes to our Consolidated Financial Statements. 22 As of December 31, 2023, the Company had $413.8 million in total debt outstanding due in 2027. The Company was in compliance with its debt covenants, including limits on additional borrowings and maintenance of certain operating and financial ratios, at December 31, 2023.
As of December 31, 2024, the Company had $340.8 million in debt outstanding due in 2029 and $30.0 million due in 2031. The Company was in compliance with its debt covenants, including limits on additional borrowings and maintenance of certain operating and financial ratios, at December 31, 2024.
Selling, General and Administrative (SG&A) Expenses 2023 2022 $ Change % Change Selling, general and administrative expenses $ 96,660 $ 83,117 $ 13,543 16.3 % % of Net sales 14.7 % 16.0 % Selling, general and administrative (“SG&A”) expenses were $96.7 million and 14.7% of net sales in 2023 compared to $83.1 million and 16.0% of net sales in 2022.
Selling, General and Administrative (SG&A) Expenses 2024 2023 $ Change % Change Selling, general and administrative expenses $ 100,506 $ 96,660 $ 3,846 4.0 % % of Net sales 15.2 % 14.7 % SG&A expenses were $100.5 million and 15.2% of net sales in 2024 compared to $96.7 million and 14.7% of net sales in 2023.
Approximately 90% of the Company’s backlog of unfilled orders is scheduled to be shipped during 2024, with the remainder principally during the first half of 2025. Incoming orders for the year ending December 31, 2023, were $617.6 million, an increase of 4.4%, compared to 2022.
The Company’s backlog of orders was $206.0 million at December 31, 2024 compared to $218.1 million at December 31, 2023, a decrease of 5.6%. Approximately 90% of the Company’s backlog of unfilled orders is scheduled to be shipped during 2025, with the remainder principally during the first half of 2026.
The 470 basis point increase in gross margin included a 380 basis point improvement in cost of material, which consisted of a favorable LIFO impact of 240 basis points, a favorable impact of 30 basis points related to the Fill-Rite inventory step-up that was recognized in 2022 that did not recur in 2023 and a 110 basis point improvement from the realization of selling price increases.
The 120 basis point increase in gross margin included a 200 basis point improvement in cost of material, which consisted of a reduction in LIFO expense of 30 basis points, a favorable impact of 20 basis points related to the amortization of acquired Fill-Rite customer backlog which occurred in 2023 and did not reoccur in 2024, and a 150 basis point improvement from the realization of selling price increases.
Interest Expense 2023 2022 $ Change % Change Interest Expense $ 41,273 $ 19,240 $ 22,033 114.5 % % of Net sales 6.3 % 3.7 % Interest expense was $41.3 million in 2023 compared to $19.2 million in 2022.
Interest Expense 2024 2023 $ Change % Change Interest Expense $ 33,621 $ 41,273 $ (7,652 ) (18.5% ) % of Net sales 5.1 % 6.3 % Interest expense was $33.6 million for 2024 compared to $41.3 million in 2023.
Goodwill and Other Intangibles The Company accounts for goodwill in a purchase business combination as the excess of the cost over the fair value of net assets acquired. Business combinations can also result in other intangible assets being recognized. Amortization of intangible assets, if applicable, occurs over their estimated useful lives.
Business combinations can also result in other intangible assets being recognized. Amortization of intangible assets, if applicable, occurs over their estimated useful lives.
The Company does not believe there is a great likelihood that materially different amounts would be reported under different conditions or using different assumptions pertaining to the accounting policies described below. 24 Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” under which the unit of account is a performance obligation.
The Company does not believe there is a great likelihood that materially different amounts would be reported under different conditions or using different assumptions pertaining to the accounting policies described below.
Non-GAAP Financial Information: The discussion of Results of Operations above includes certain non-GAAP financial data and measures such as adjusted earnings, adjusted earnings per share, and adjusted earnings before interest, taxes, depreciation and amortization. Adjusted earnings is earnings excluding non-cash pension settlement charges, one-time acquisition costs, amortization of step up in value of acquired inventories, and amortization of customer backlog.
Non-GAAP Financial Information: This discussion of Results of Operations includes certain non-GAAP financial data and measures such as adjusted earnings, adjusted earnings per share, and adjusted earnings before interest, taxes, depreciation and amortization.
Sales increased $22.6 million in the fire market primarily from increased domestic commercial construction, $9.6 million in the repair market due to strengthening in the broader industrial economy, $8.8 million in the municipal market due to domestic flood control and wastewater projects related to increased infrastructure investment, and $2.8 million in the OEM market.
Sales increased $21.5 million in the municipal market and $5.3 million in the repair market due to domestic flood control and wastewater projects related to increased infrastructure investment, $2.6 million in the OEM market primarily related to computer cooling, and $1.0 million in the petroleum market primarily driven by increased international refueling applications.
Net Income 2023 2022 $ Change % Change Income before income taxes $ 43,961 $ 13,872 $ 30,089 216.9 % % of Net sales 6.7 % 2.7 % Income taxes $ 9,010 $ 2,677 $ 6,333 236.6 % Effective tax rate 20.5 % 19.3 % Net income $ 34,951 $ 11,195 $ 23,756 212.2 % % of Net sales 5.3 % 2.1 % Earnings per share $ 1.34 $ 0.43 $ 0.91 211.6 % Net income was $35.0 million, or $1.34 per share, in 2023 compared to net income of $11.2 million, or $0.43 per share in 2022.
Net Income 2024 2023 $ Change % Change Income before income taxes $ 50,493 $ 43,961 $ 6,532 14.9 % % of Net sales 7.7 % 6.7 % Income taxes $ 10,378 $ 9,010 $ 1,368 15.2 % Effective tax rate 20.6 % 20.5 % Net income $ 40,115 $ 34,951 $ 5,164 14.8 % % of Net sales 6.1 % 5.3 % Earnings per share $ 1.53 $ 1.34 $ 0.19 14.2 % Adjusted earnings per share $ 1.75 $ 1.37 $ 0.38 27.7 % Net income was $40.1 million, or $1.53 per share, for 2024 compared to net income of $35.0 million, or $1.34 per share, for 2023.
However, any future dividends will be reviewed individually and declared by our Board of Directors at its discretion, dependent on our assessment of the Company’s financial condition and business outlook at the applicable time. Outlook Our backlog has come down from the record levels that we saw in early 2023 but remains elevated as we enter 2024.
The Company currently expects to continue its exceptional history of paying regular quarterly dividends and increased annual dividends. However, any future dividends will be reviewed individually and declared by our Board of Directors at its discretion, dependent on our assessment of the Company’s financial condition and business outlook at the applicable time.
Substantially all of our revenue is derived from fixed-price customer contracts and the majority of our customer contracts have a single performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer.
A performance obligation is a promise in a contract to transfer a distinct good or service to a customer.
Adjusted earnings per share in 2023 were $1.37 per share compared to $0.94 per share in 2022. Adjusted earnings per share in 2023 included an unfavorable LIFO impact of $0.21 per share compared to an unfavorable LIFO impact of $0.56 per share in 2022. Adjusted earnings per share is a non-GAAP financial measure- please see “Non-GAAP Financial Information” below.
Adjusted earnings per share for 2024 were $1.75 per share compared to $1.37 per share for 2023. Adjusted earnings per share is a non-GAAP financial measure, please see “Non-GAAP Financial Information” below. The Company’s effective tax rate was 20.6% for 2024 compared to 20.5% for 2023.
On January 25, 2024, the Board of Directors authorized the payment of a quarterly dividend of $0.18 per share, representing the 296th consecutive quarterly dividend to be paid by the Company. During 2023, the Company again paid increased dividends and thereby attained its 51st consecutive year of increased dividends.
Incoming orders for the year ending December 31, 2024, were $659.3 million, an increase of 6.8%, compared to 2023. On January 24, 2025, the Board of Directors authorized the payment of a quarterly dividend of $0.185 per share, representing the 300th consecutive quarterly dividend to be paid by the Company.
Amortization Expense 2023 2022 $ Change % Change Amortization expense $ 12,552 $ 7,637 $ 4,915 64.4 % % of Net sales 1.9 % 1.5 % Amortization expense was $12.6 million in 2023 compared to $7.6 million in 2022.
Other Income (Expense), net 2024 2023 $ Change % Change Other income (expense), net $ (7,329 ) $ (1,807 ) $ (5,522 ) (305.6% ) % of Net sales (1.1% ) (0.3% ) Other income (expense), net was $7.3 million of expense for 2024 compared to $1.8 million of expense in 2023.
Operating Income 2023 2022 $ Change % Change Operating Income $ 87,041 $ 40,183 $ 46,858 116.6 % % of Net sales 13.2 % 7.7 % Operating income was $87.0 million in 2023, resulting in an operating margin of 13.2%, compared to operating income of $40.2 million and operating margin of 7.7% in 2022.
SG&A expenses increased due to healthcare costs, as well as increased selling activity. 19 Operating Income 2024 2023 $ Change % Change Operating Income $ 91,443 $ 87,041 $ 4,402 5.1 % % of Net sales 13.9 % 13.2 % Operating income was $91.4 million for 2024, resulting in an operating margin of 13.9%, compared to operating income of $87.0 million and operating margin of 13.2% in 2023.
Operating margin in 2023 increased 390 basis points compared to 2022, excluding acquisition costs and inventory step-up in 2022, due to improved margin on material costs, and improved leverage on SG&A expense due to increased sales volumes partially offset by increased amortization expense.
Operating margin in 2024 increased 70 basis points compared to the same period in 2023 primarily due to improved cost of material, partially offset by increased labor, overhead, and SG&A expenses.
In addition, cash flow from accounts payable decreased $11.0 million from 2021 to 2022 and deferred revenue and customer deposits have decreased in the current year compared to an increase in the prior year. During 2023, net cash used for investing activities of $20.2 million consisted primarily of $20.8 million used for capital expenditures, largely related to machinery and equipment.
During 2024, net cash used for investing activities of $11.9 million consisted primarily of $14.3 million used for capital expenditures, largely related to machinery and equipment partially offset by $2.5 million in proceeds from the sale of property, plant, and equipment.
The increase in sales was due to the inclusion of a full year of Fill-Rite sales compared to seven months of sales included in the prior year as well as an increase in volume and the impact of pricing increases taken in 2022 and an annual price increase in the first quarter of 2023.
The increase in sales was due primarily to the impact of pricing increases taken in the first quarter of 2024.
Our diverse markets continue to be a strength and we remain well positioned to benefit from infrastructure spending and the increased demand for flood control and storm water management. 18 Results of Operations – Year ended December 31, 2023 compared to year ended December 31, 2022: Net Sales End Market 2023 2022 $ Change % Change Industrial $ 136,978 $ 100,826 $ 36,152 35.9 % Fire 143,551 121,001 22,550 18.6 % Agriculture 83,053 57,703 25,350 43.9 % Construction 86,996 60,557 26,439 43.7 % Municipal 78,528 69,726 8,802 12.6 % Petroleum 23,168 16,464 6,704 40.7 % OEM 37,708 34,820 2,888 8.3 % Repair parts 69,529 59,930 9,599 16.0 % Total net sales $ 659,511 $ 521,027 $ 138,484 26.6 % Net sales for 2023 of $659.5 million increased 26.6% or $138.5 million compared to net sales of $521.0 million in 2022.
We remain focused on delivering long-term profitable growth. 18 Results of Operations – Year ended December 31, 2024 compared to year ended December 31, 2023: Net Sales End Market 2024 2023 $ Change % Change Industrial $ 131,479 $ 136,978 $ (5,499 ) (4.0 %) Fire 121,418 143,551 (22,133 ) (15.4 %) Agriculture 82,224 83,053 (829 ) (1.0 %) Construction 85,149 86,996 (1,847 ) (2.1 %) Municipal 100,019 78,528 21,491 27.4 % Petroleum 24,188 23,168 1,020 4.4 % OEM 40,343 37,708 2,635 7.0 % Repair parts 74,847 69,529 5,318 7.6 % Total net sales $ 659,667 $ 659,511 $ 156 0.1 % Net sales for 2024 were $659.7 million compared to net sales of $659.5 million for 2023, an increase of 0.1% or $0.2 million.
Removed
On May 31, 2022, the Company acquired the assets of Fill-Rite and Sotera (“Fill-Rite”), a division of Tuthill Corporation, for $528.0 million. When adjusted for approximately $80.0 million in expected tax benefits, the net transaction value is approximately $448.0 million. The Company funded the transaction with cash on-hand and new debt.
Added
Outlook Strong incoming orders in 2024 and a healthy backlog as of December 31, 2024 position us well to begin the new year. We remain well positioned to benefit from infrastructure spending and the strong demand for flood control and storm water management.
Removed
The Company incurred $7.1 million of one-time acquisition costs during the year ended December 31, 2022. The results of operations for Fill-Rite from the acquisition date going forward are included in the Company’s Consolidated Statements of Income.
Added
Offsetting these increases was a decrease of $22.1 million in the fire suppression market primarily resulting from backlog returning to more normal levels.
Removed
The Company’s backlog of orders was $218.1 million at December 31, 2023 compared to $267.4 million at December 31, 2022, a decrease of 18.4%. The backlog was reduced from record levels towards the end of 2022 and beginning of 2023. The backlog aging in 2023 was consistent with historical levels.
Added
Fire suppression sales in 2023 were up significantly compared to 2022 as the Company was working to return backlog and lead times to normal levels, which resulted in higher 2023 sales and a tougher year-over-year comparison for 2024. Fire suppression incoming orders for 2024 were up 1.5% when compared to 2023.
Removed
We expect backlog to return to more normal levels during 2024.
Added
Sales in 2024 also decreased $5.5 million in the industrial market and $1.8 million in the construction market, and $0.8 million in the agriculture market.
Removed
The Company’s two price increases in 2022, as well as the price increase in 2023 averaged between 4%-5%. Domestic sales increased 30.4% or $116.1 million and international sales increased 16.0% or $22.4 million compared to 2022.
Added
These improvements were partially offset by an 80 basis point increase in labor and overhead expenses as a percent of sales driven by increased healthcare costs.
Removed
Sales increased $36.2 million in the industrial market primarily due to the inclusion of a full year of Fill-Rite sales in 2023 compared to seven months of sales included in the prior year. In addition to the increase from Fill-Rite, industrial sales increased $14.2 million due to the strengthening in the broader industrial economy.
Added
SG&A expenses for 2024 included $1.3 million of refinancing transaction costs and a $1.1 million gain on the sale of a fixed asset.
Removed
Sales increased $25.4 million in the agriculture market due entirely to the inclusion of a full year of Fill-Rite sales compared to seven months of sales in the prior year.
Added
The decrease in interest expense was due to a series of debt refinancing transactions the Company completed on May 31, 2024 as well as a decrease in outstanding debt. In addition to reducing interest expense, the refinancing also extended and staggered the Company’s debt maturities.
Removed
Sales increased $26.4 million in the construction market primarily due to the inclusion of a full year of Fill-Rite sales compared to seven months of sales included in the prior year. In addition to the increase from Fill-Rite, construction sales increased $8.9 million due to overall strong conditions including infrastructure related projects.
Added
The Company upsized, amended, and extended the existing Senior Term Loan Facility from $350.0 million to $370.0 million, amended and extended the existing $100.0 million revolving Credit Facility, and issued $30.0 million in new 6.40% Senior Secured Notes.
Removed
Sales in the petroleum market increased $6.7 million primarily due to the inclusion of a full year of Fill-Rite sales compared to seven months of sales included in the prior year as well as increased demand for larger petroleum transfer pumps.
Added
The proceeds from these transactions, as well as $10.0 million of cash on hand, were used to retire the Company’s $90.0 million unsecured Subordinated Credit Facility.
Removed
The increase in gross margin also included a 90 basis point improvement on labor and overhead leverage due to increased sales volume and sales mix which includes a full year of Fill-Rite sales in 2023 compared to seven months in 2022. 19 For further discussion on the LIFO inventory costing method, see Note 1 “Summary of Significant Accounting Policies” and Note 4 “Inventories” in the Notes to our Consolidated Financial Statements.
Added
Other expense for 2024 included a $4.4 million write-off of unamortized previously deferred debt financing fees and a $1.8 million prepayment fee related to the early retirement of the unsecured Subordinated Credit Facility.
Removed
SG&A expenses in 2022 included $7.1 million of one-time acquisition costs. Excluding acquisition costs of $7.1 million, SG&A expenses were $76.0 million and 14.6% of net sales in 2022.
Added
Adjusted earnings is earnings excluding non-cash pension settlement charges, one-time acquisition costs, amortization of step up in value of acquired inventories, amortization of customer backlog, write-off of unamortized previously deferred debt financing fees, and refinancing costs.
Removed
The increase in SG&A expenses, excluding acquisition costs, was due to the inclusion of Fill-Rite expenses for the full year in 2023 as compared to seven months in 2022, as well as increased expenses to support sales growth.
Added
The increase in cash provided by operating activities in 2023 compared to 2022 was primarily due increased earnings before depreciation, amortization, and LIFO expense, and improved cash flow from working capital management.
Removed
The increase in amortization expense was due to the inclusion of a full year of amortization attributable to the Fill-Rite acquisition in 2023 compared to seven months in 2022.
Added
During 2024, net cash used for financing activities of $63.1 million consisted primarily of net payments on bank borrowings of $43.0 million and dividend payments of $19.0 million.
Removed
Operating income in 2022 included $7.1 million of one-time acquisition costs, and $1.4 million of inventory step-up amortization. Excluding acquisition costs and inventory step-up totaling $8.5 million, operating income was $48.7 million in 2022 resulting in an operating margin of 9.3% of net sales.
Added
Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” under which the unit of account is a performance obligation. Substantially all of our revenue is derived from fixed-price customer contracts and the majority of our customer contracts have a single performance obligation.
Removed
The increase in interest expense was primarily due to the inclusion of a full year of interest expense in 2023 compared to seven months in 2022 on the debt financing attributable to the Fill-Rite acquisition, as well as increased interest rates in 2023 as compared to 2022. 20 Other Income (Expense), net 2023 2022 $ Change % Change Other income (expense), net $ (1,807 ) $ (7,071 ) $ 5,264 74.4 % % of Net sales -0.3 % -1.4 % Other income (expense), net was $1.8 million of expense in 2023 compared to $7.1 million of expense in 2022.
Added
The assumption used for the rate of increase in medical costs over the next five years was 4.8% in 2024 and 5.0% in 2023. 24 Goodwill and Other Intangibles The Company accounts for goodwill in a purchase business combination as the excess of the cost over the fair value of net assets acquired.
Removed
The $7.1 million of expense in 2022 included non-cash pension settlement charges of $6.4 million, which did not recur in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed4 unchanged
Biggest changeBorrowings under the subordinated credit facility bear interest at (i) either a base rate plus 8.0%, or at (ii) an Adjusted Term SOFR Rate plus 9.1%. At December 31, 2023, the Company had $323.8 million in borrowings under the senior term loan facility, $90.0 million in borrowings under the subordinated credit facility, and no borrowings under the revolving credit facility.
Biggest changeAt December 31, 2024, the Company had $340.8 million in borrowings under the Senior Term Loan Facility and no borrowings under the Credit Facility. As of December 31, 2024, the applicable interest rates under the Senior Secured Credit Agreement were Adjusted Term SOFR plus 2.0%.
The interest rate swap agreements are expected to be designated as a cash flow hedge, and as a result, the mark-to-market gains or losses will be deferred and included as a component of accumulated other comprehensive income (loss) and reclassified to interest expense in the period during which the hedged transactions affect earnings.
The interest rate swap agreements are designated as a cash flow hedge, and as a result, the mark-to-market gains or losses will be deferred and included as a component of accumulated other comprehensive income (loss) and reclassified to interest expense in the period during which the hedged transactions affect earnings.
These financial instruments are used to mitigate market exposure and are not used for trading or speculative purposes. 27 Interest Rate Risk The results of operations are exposed to changes in interest rates primarily with respect to borrowings under the Company’s senior term loan facility, revolving credit facility, and subordinated credit facility.
These financial instruments are used to mitigate market exposure and are not used for trading or speculative purposes. Interest Rate Risk The results of operations are exposed to changes in interest rates primarily with respect to borrowings under the Company’s Senior Term Loan Facility and Credit Facility.
See “Derivative Financial Instruments” and “Interest Rate Derivatives” in the Notes to our Consolidated Financial Statements. The Company estimates that a hypothetical increase of 100 basis points in interest rates would increase interest expense by approximately $2.5 million on an annual basis.
See “Derivative Financial Instruments” and “Interest Rate Derivatives” in the Notes to our Consolidated Financial Statements. The Company estimates that a hypothetical increase of 100 basis points in interest rates would increase interest expense by approximately $1.9 million on an annual basis.
See Note 5 “Financing Arrangements” in the Notes to our Consolidated Financial Statements. To reduce the exposure to changes in the market rate of interest, effective October 31, 2022, the Company entered into interest rate swap agreements for a portion of the senior term loan facility.
See Note 5 - Financing Arrangements in the notes to our Consolidated Financial Statements. 26 To reduce the exposure to changes in the market rate of interest, effective October 31, 2022, the Company entered into interest rate swap agreements for a portion of the Senior Term Loan Facility.
Borrowings under the senior term loan facility and revolving credit facility may be made either at (i) a base rate plus the applicable margin, which ranges from 0.75% to 1.75%, or at (ii) an Adjusted Term SOFR Rate, plus the applicable margin, which ranges from 1.75% to 2.75%.
Borrowings under the Senior Term Loan Facility and Credit Facility may be made either at (i) a base rate plus the applicable margin, which ranges from 0.50% to 1.25%, or at (ii) an Adjusted Term SOFR Rate, plus the applicable margin, which ranges from 1.5% to 2.25%.
The foreign currency transaction gains (losses) for 2023 and 2022 were $(0.4) million and $0.2 million, respectively, and are reported within Other (expense) income, net on the Consolidated Statements of Income. There were no net foreign currency transaction gains (losses) for the period ending December 31, 2021.
The foreign currency transaction gains (losses) for 2024, 2023 and 2022 were $(0.4) million, $(0.4) million and $0.2 million, respectively, and are reported within Other (expense) income, net on the Consolidated Statements of Income.

Other GRC 10-K year-over-year comparisons