United States securities and exchange commission logo
May 26, 2023
James C. Kerr
Chief Financial Officer
The Gorman-Rupp Company
600 South Airport Road
Mansfield, Ohio 44903
Re: The Gorman-Rupp
Company
Form 10-K for the
Fiscal Year ended December 31, 2022
Filed March 8, 2023
File No. 001-06747
Dear James C. Kerr:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year ended December 31, 2022
Properties, page 11
1. We note that you
identify the locations of fifteen production facilities and state that you
consider the plants,
machinery and equipment "to be well maintained, in good operating
condition and adequate
for the present uses and business requirements of the Company."
However, you are
required to describe the facilities in a manner that will reasonably
inform investors as to
the suitability, adequacy, productive capacity, and extent of
utilization to comply
with Instruction 1 to Item 102 of Regulation S-K.
For example, describe
the nature of operations conducted at the various facilities, in terms
of the markets served
or class of products manufactured, indicate the extent to which there
is versatility in those
activities, and provide volumetric details of capacity and utilization
with an explanation of
the underlying calculations.
James C. Kerr
FirstName LastNameJames
The Gorman-Rupp CompanyC. Kerr
Comapany
May NameThe Gorman-Rupp Company
26, 2023
May 26,
Page 2 2023 Page 2
FirstName LastName
Please submit the revisions that you propose to address the
aforementioned guidance.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Executive Overview, page 15
2. We note that your disclosures begin with reference to a recent
acquisition followed by a
discussion of your non-GAAP measures of adjusted earnings per share,
and adjusted
earnings before interest, taxes, depreciation and amortization; which
you explain are
utilized "to assess comparative operations against those of prior
periods without the
distortion of non-comparable factors...[and] will be useful to
investors in assessing the
strength of the Company s underlying operations from period to
period."
As presented your discussion and analysis appears to place greater
emphasis on non-
GAAP measures, which would generally be contrary to Item
10(e)(1)(i)(A) of Regulation
S-K and the associated guidance in the answer to Question 102.10(a) of
our Compliance
and Disclosure Interpretations for Non-GAAP measures.
Please reposition your non-GAAP disclosures to follow a comparable
discussion and
analysis of your GAAP information. Please also clarify your rationale
for presenting non-
GAAP adjusted earnings per share adjacent to your non-GAAP adjusted
earnings before
interest, taxes, depreciation and amortization; without the
corresponding aggregate non-
GAAP adjusted earnings amounts.
We expect that you would need to have incremental disclosures
clarifying how these
measures are considered to be complementary, if that is your view, and
why you would
present one measure on a per share basis and the other on an aggregate
basis.
Results of Operations, page 17
3. We note that you disclose the changes in net sales for domestic and
international sales,
and for various product markets, including water, fire, municipal,
repair, construction,
agriculture, non-water, industrial, OEM, and petroleum. However, Item
303(b)(2) of
Regulation S-K generally requires additional information, including a
discussion and
analysis that would describe the following matters.
Any unusual or infrequent events or transactions or any
significant economic changes
that materially affected the amount of reported income from
continuing operations
and, in each case, the extent to which income was so affected.
Any known trends or uncertainties that have had or that are
reasonably likely to have
a material favorable or unfavorable impact on net sales or income
from continuing
operations.
The extent to which material changes in net sales are
attributable to changes in prices
or to changes in the volume or the amount of goods or services
being sold, or to the
James C. Kerr
FirstName LastNameJames
The Gorman-Rupp CompanyC. Kerr
Comapany
May NameThe Gorman-Rupp Company
26, 2023
May 26,
Page 3 2023 Page 3
FirstName LastName
introduction of new products or services.
Please expand your disclosures as necessary to address these
requirements, including
quantification of the volumes of products sold in the various markets
identified each
period. Given the number of markets identified, it would be helpful to
include a
tabulation with comparative sales and volumetric details for each
market.
Please submit the revisions that you propose to address these
concerns.
Liquidity and Capital Resources, page 19
4. We note that you describe your measure of free cash flow as "a
non-GAAP measure for
reporting cash flow" which you believe "provides investors with an
important perspective
on cash available for investments, acquisitions and working capital
requirements," and
that you reconcile the measure to another non-GAAP measure.
There are several disclosure requirements in Item 10(e) of Regulation
S-K that apply
when presenting non-GAAP measures in your periodic filings and similar
requirements in
Regulation G that apply generally to public disclosures of information
that include non-
GAAP measures, such as earnings releases and investor presentations.
We believe that you should revise your disclosures of non-GAAP
information to comply
with Item 10(e)(1)(i)(A) and (B), and (1)(ii)(A) of Regulation S-K.
For example, you are
required to include a presentation, with equal or greater prominence,
of the most directly
comparable financial measure calculated and presented in accordance
with GAAP, along
with a reconciliation from such comparable GAAP measure to your
non-GAAP measure.
Given your characterization of the free cash flow measure as a
liquidity measure, we
believe that cash flow from operations would be the most directly
comparable GAAP
measure. However, in presenting a non-GAAP liquidity measure, you may
not exclude
charges or liabilities that required, or will require, cash
settlement, or that would have
required cash settlement absent an ability to settle in another
manner.
Please submit the revisions that you propose to address the guidance
referenced above.
Note 4 - Revenue, page 40
5. We note that you identify two categories for revenue disaggregation
along with two
geographic locations, and that your pumps and pump systems category
represents 88% of
revenues for 2022.
However, in MD&A you identify changes in revenues for ten product
markets and in
describing your business on pages 10-21 of your May 2023 investor
presentation on your
website, you similarly provide information that is oriented or aligned
with these markets.
Please explain to us how you determined that presenting revenue
details based on the
James C. Kerr
The Gorman-Rupp Company
May 26, 2023
Page 4
market served would not more clearly align with the objectives
described in FASB
ASC 606-10-55-89 and 90, if this is your view.
Note 9 - Income Taxes, page 46
6. We note that you have several foreign subsidiaries and that a material
portion of your
income is derived from foreign operations. Please confirm that you
have no unrecognized
deferred tax liabilities related to investments in subsidiaries and
corporate joint ventures,
or if this is not the case address the disclosure requirements in FASB
ASC 740-30-50-2.
Financial Statements
Note 12 - Business Segment Information, page 53
7. We note that you provide details of revenue on a geographical basis,
for the United States
and all foreign countries combined.
Please explain to us how you evaluated the requirements in FASB ASC
280-10-50-41 in
determining that further disclosures were not required, i.e. where
revenues from external
customers attributed to an individual foreign country and assets
located in an individual
foreign country were not material, if this is your view.
Please submit the details of revenues and assets considered in
formulating your position.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Yolanda Guobadia, Staff Accountant, at (202) 551-3562 or
Karl Hiller,
Branch Chief, at (202) 551- 3686 with any questions.
FirstName LastNameJames C. Kerr Sincerely,
Comapany NameThe Gorman-Rupp Company
Division of
Corporation Finance
May 26, 2023 Page 4 Office of
Energy & Transportation
FirstName LastName