10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2019

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number 1-6747

The Gorman-Rupp Company

(Exact name of registrant as specified in its charter)

Ohio	34-0253990
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
600 South Airport Road, Mansfield, Ohio	44903
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (419) 755-1011

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, without par value	GRC	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐        No  ☒

On July 26, 2019, there were 26,133,393 common shares, without par value, of The Gorman-Rupp Company outstanding.

The Gorman-Rupp Company

Three and six months ended June 30, 2019 and 2018

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income - Three months ended June 30, 2019 and 2018 - Six months ended June 30, 2019 and 2018	3
	Consolidated Statements of Comprehensive Income - Three months ended June 30, 2019 and 2018 - Six months ended June 30, 2019 and 2018	3
	Consolidated Balance Sheets - June 30, 2019 and December 31, 2018	4
	Consolidated Statements of Cash Flows - Six months ended June 30, 2019 and 2018	5
	Consolidated Statements of Equity - Three months ended June 30, 2019 and 2018 - Six months ended June 30, 2019 and 2018	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21
Item 4.	Controls and Procedures	21
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 6.	Exhibits	23
EX-31.1	Section 302 Principal Executive Officer (PEO) Certification	25
EX-31.2	Section 302 Principal Financial Officer (PFO) Certification	26
EX-32	Section 1350 Certifications	27

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PART I. FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS (UNAUDITED)

THE GORMAN-RUPP COMPANY

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands, except per share amounts)		2019		2018			2019		2018
Net sales	$	108,330	$	111,827		$	205,189	$	208,431
Cost of products sold		80,138		81,962			153,684		152,360
Gross profit		28,192		29,865			51,505		56,071
Selling, general and administrative expenses		14,988		14,872			29,351		29,228
Operating income		13,204		14,993			22,154		26,843
Other income (expense), net		231		(2,407	)		523		(1,601	)
Income before income taxes		13,435		12,586			22,677		25,242
Income taxes		2,955		2,413			4,975		5,452
Net income	$	10,480	$	10,173		$	17,702	$	19,790
Earnings per share	$	0.40	$	0.39		$	0.68	$	0.76
Cash dividends per share	$	0.135	$	0.125		$	0.270	$	0.250
Average number of shares outstanding		26,124,216		26,107,670			26,121,568		26,107,149

See notes to consolidated financial statements (unaudited).

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands)		2019		2018			2019		2018
Net income	$	10,480	$	10,173		$	17,702	$	19,790
Other comprehensive income, net of tax:
Cumulative translation adjustments		583		(1,855	)		431		(1,666	)
Pension and postretirement medical liability adjustments		378		1,921			694		2,431
Other comprehensive income		961		66			1,125		765
Comprehensive income	$	11,441	$	10,239		$	18,827	$	20,555

See notes to consolidated financial statements (unaudited).

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THE GORMAN-RUPP COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)	June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	62,165		$	46,458
Accounts receivable, net		75,476			67,714
Inventories, net		78,809			87,387
Prepaid and other		4,411			7,127
Total current assets		220,861			208,686
Property, plant and equipment, net		110,526			113,493
Other assets		9,307			5,101
Prepaid pension assets		4,269			4,817
Goodwill and other intangible assets, net		35,633			36,185
Total assets	$	380,596		$	$368,282
Liabilities and equity
Current liabilities:
Accounts payable	$	14,306		$	16,678
Payroll and employee related liabilities		13,313			12,651
Commissions payable		8,370			9,222
Deferred revenue and customer deposits		7,260			5,232
Accrued expenses		5,845			4,682
Total current liabilities		49,094			48,465
Postretirement benefits		21,224			21,853
Other long-term liabilities		4,929			4,832
Total liabilities		75,247			75,150
Equity:
Common shares, without par value:
Authorized – 35,000,000 shares;
Outstanding – 26,124,393 shares at June 30, 2019 and 26,117,045 shares at December 31, 2018 (after deducting treasury shares of 924,403 and 931,751, respectively), at stated capital amounts		5,104			5,102
Additional paid-in capital		2,943			2,539
Retained earnings		319,600			308,914
Accumulated other comprehensive loss		(22,298	)		(23,423	)
Total equity		305,349			293,132
Total liabilities and equity	$	380,596		$	368,282

See notes to consolidated financial statements (unaudited).

4

THE GORMAN-RUPP COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
(Dollars in thousands)	2019			2018
Cash flows from operating activities:
Net income	$	17,702		$	19,790
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7,095			7,210
Pension expense		1,411			3,660
Contributions to pension plan		—			(4,000	)
Stock based compensation		474			606
Changes in operating assets and liabilities:
Accounts receivable, net		(7,707	)		(7,254	)
Inventories, net		8,765			(5,214	)
Accounts payable		(2,396	)		966
Commissions payable		(836	)		1,025
Deferred revenue and customer deposits		2,028			(765	)
Income taxes		1,577			(3,839	)
Accrued expenses and other		(900	)		(2,727	)
Benefit obligations		(725	)		4,879
Net cash provided by operating activities		26,488			14,337
Cash used for investing activities:
Capital additions		(3,464	)		(5,479	)
Proceeds (purchases) of short-term investments, net		(2	)		2,969
Net cash used for investing activities		(3,466	)		(2,510	)
Cash used for financing activities:
Cash dividends		(7,053	)		(6,527	)
Other		(452	)		(459	)
Net cash used for financing activities		(7,505	)		(6,986	)
Effect of exchange rate changes on cash		190			(800	)
Net increase in cash and cash equivalents		15,707			4,041
Cash and cash equivalents:
Beginning of period		46,458			79,680
End of period	$	62,165		$	83,721

See notes to consolidated financial statements (unaudited).

5

THE GORMAN-RUPP COMPANY

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(Dollars in thousands, except share and per share amounts)	Common Shares				Additional Paid-In			Retained			Accumulated Other Comprehensive
	Shares		Dollars		Capital			Earnings			(Loss) Income			Total
Balances December 31, 2018		26,117,045	$	5,102	$	2,539		$	308,914		$	(23,423	)	$	293,132
Net income									7,222						7,222
Other comprehensive income												164			164
Stock based compensation		6,647		1		(81	)		35						(45	)
Cash dividends - $0.135 per share									(3,526	)					(3,526	)
Balances March 31, 2019		26,123,692	$	5,103	$	2,458		$	312,645		$	(23,259	)	$	296,947
Net income									10,480						10,480
Other comprehensive income												961			961
Stock based compensation		701		1		485			2						488
Cash dividends - $0.135 per share									(3,527	)					(3,527	)
Balances June 30, 2019		26,124,393	$	5,104	$	2,943		$	319,600		$	(22,298	)	$	305,349

(Dollars in thousands, except share and per share amounts)	Common Shares				Additional Paid-In		Retained			Accumulated Other Comprehensive
	Shares		Dollars		Capital		Earnings			(Loss) Income			Total
Balances December 31, 2017		26,106,623	$	5,100	$	526	$	332,378		$	(12,509	)	$	325,495
Net income								9,617						9,617
Other comprehensive income											699			699
Cash dividends - $0.125 per share								(3,263	)					(3,263	)
Balances March 31, 2018		26,106,623	$	5,100	$	526	$	338,732		$	(11,810	)	$	332,548
Net income								10,173						10,173
Other comprehensive income											66			66
Stock based compensation		1,422				38		6						44
Cash dividends - $0.125 per share								(3,264	)					(3,264	)
Balances June 30, 2018		26,108,045	$	5,100	$	564	$	345,647		$	(11,744	)	$	339,567

See notes to consolidated financial statements (unaudited).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in tables in thousands of dollars, except for per share amounts)

NOTE 1 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The Consolidated Financial Statements include the accounts of The Gorman-Rupp Company (the “Company” or “Gorman-Rupp”) and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management of the Company, all adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2019 are not necessarily indicative of results that may be expected for the year ending December 31, 2019. For further information, refer to the Consolidated Financial Statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, from which related information herein has been derived.

NOTE 2 - RECENTLY ISSUED ACCOUNTING STANDARDS

The Company considers the applicability and impact of all Accounting Standard Updates (“ASUs”). ASUs not listed below were assessed and determined either to be not applicable or are expected to have minimal impact on the Company’s Consolidated Financial Statements.

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with a term of more than one year. Accounting by lessors remains similar to pre-existing U.S. GAAP. Subsequent accounting standards updates have been issued, which amend and/or clarify the application of ASU 2016-02. The Company adopted Topic 842 effective January 1, 2019. See Note 9, Leases for further details.

NOTE 3 - REVENUE

Disaggregation of Revenue

The following tables disaggregate total net sales by major product category and geographic location:

	Product Category
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Pumps and pump systems	$	92,167	$	97,784	$	174,688	$	178,611
Repair parts for pumps and pump systems and other		16,163		14,043		30,501		29,820
Total net sales	$	108,330	$	111,827	$	205,189	$	208,431

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	Geographic Location
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
United States	$	74,784	$	71,519	$	142,485	$	135,952
Foreign countries		33,546		40,308		62,704		72,479
Total net sales	$	108,330	$	111,827	$	205,189	$	208,431

International sales represented approximately 31% and 36% of total net sales for the second quarter of 2019 and 2018, respectively, and were made to customers in many different countries around the world.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account in ASC Topic 606. 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. For product sales, other than long-term construction-type contracts, the Company recognizes revenue once control has passed at a point in time, which is generally when products are shipped. Payments received for product sales typically occur following delivery and the satisfaction of the performance obligation based upon the terms outlined in the contracts. Substantially all of our customer contracts are fixed-price contracts and the majority of our customer contracts have a single performance obligation, as the promise to transfer the individual products or services is not separately identifiable from other promises in the contract. 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.

All of the Company’s performance obligations, and associated revenue, are generally transferred to customers at a point in time, with the exception of certain highly customized pump products, which are transferred to the customer over time.

The Company offers standard warranties for its products to ensure that its products comply with agreed-upon specifications in its contracts. For standard warranties, these do not give rise to performance obligations and represent assurance-type warranties.

Shipping and handling activities related to products sold to customers, whether performed before or after the customer obtains control of the products, are generally accounted for as activities to fulfill the promise to transfer the products and not as a separate performance obligation.

On June 30, 2019, the Company had $107.0 million of remaining performance obligations, also referred to as backlog. The Company expects to recognize as revenue substantially all of its remaining performance obligations within one year.

Contract Estimates

Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, the Company estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognizes that profit as performance obligations are satisfied. Contract estimates are based on various assumptions to project the outcome of future events that could span longer than one year. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and the performance of subcontractors as applicable.

As a significant change in one or more of these estimates could affect the profitability of our contracts, the Company reviews and updates its contract-related estimates regularly. Adjustments in estimated profit on contracts are accounted for under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate.

8

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) in the Consolidated Balance Sheets. For certain highly customized pump products, revenue is recognized over time before the customer is invoiced, resulting in contract assets. Sometimes the Company receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These contract assets and liabilities are reported in the Consolidated Balance Sheets as a component of Other assets and Deferred revenue and customer deposits, respectively, on a contract-by-contract basis at the end of each reporting period.

The Company’s contract assets and liabilities as of June 30, 2019 and December 31, 2018, respectively, were as follows:

	June 30, 2019		December 31, 2018
Contract assets	$	801	$	1,953
Contract liabilities	$	7,260	$	5,232

Revenue recognized for the six months ended June 30, 2019 and 2018 that was included in the contract liabilities balance at the beginning of the period was $4.9 million and $3.3 million, respectively.

NOTE 4 - INVENTORIES

LIFO inventories are stated at the lower of cost or market and all other inventories are stated at the lower of cost or net realizable value. Replacement cost approximates current cost and the excess over LIFO cost is approximately $65.2 million and $63.7 million at June 30, 2019 and December 31, 2018, respectively. Allowances for excess and obsolete inventory totaled $5.4 million and $5.3 million at June 30, 2019 and December 31, 2018, respectively. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels and costs at that time. Interim LIFO calculations are based on management’s estimate of expected year-end inventory levels and costs, and are subject to the final year-end LIFO inventory valuation.

Inventories are comprised of the following:

Inventories, net:	June 30, 2019		December 31, 2018
Raw materials and in-process	$	17,985	$	21,773
Finished parts		50,584		54,209
Finished products		10,240		11,405
Total net inventories	$	78,809	$	87,387

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consist of the following:

	June 30, 2019			December 31, 2018
Land	$	3,876		$	3,869
Buildings		107,676			106,940
Machinery and equipment		180,338			177,668
		291,890			288,477
Less accumulated depreciation		(181,364	)		(174,984	)
Property, plant and equipment, net	$	110,526		$	113,493

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NOTE 6 - PRODUCT WARRANTIES

A liability is established for estimated future warranty and service claims based on historical claims experience and specific product failures. The Company expenses warranty costs directly to Cost of products sold. Changes in the Company’s product warranties liability are:

	June 30,
	2019			2018
Balance at beginning of year	$	1,380		$	1,098
Provision		948			586
Claims		(822	)		(686	)
Balance at end of period	$	1,506		$	998

NOTE 7 - PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company sponsors a defined benefit pension plan (“Plan”) covering certain domestic employees. Benefits are based on each covered employee’s years of service and compensation. The Plan is funded in conformity with the funding requirements of applicable U.S. regulations. The Plan was closed to new participants effective January 1, 2008. Employees hired after this date, in eligible locations, participate in an enhanced 401(k) plan instead of the defined benefit pension plan. Employees hired prior to this date continue to accrue benefits.

Additionally, the Company sponsors defined contribution pension plans made available to all domestic and Canadian employees. The Company funds the cost of these benefits as incurred.

The Company also sponsors a non-contributory defined benefit postretirement health care plan that provides health benefits to certain domestic and Canadian retirees and eligible spouses and dependent children. The Company funds the cost of these benefits as incurred.

The following tables present the components of net periodic benefit costs:

	Pension Benefits						Postretirement Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
Service cost	$	535		$	602		$	270		$	194
Interest cost		581			632			236			141
Expected return on plan assets		(836	)		(1,103	)		—			—
Amortization of prior service cost		—			—			(282	)		(282	)
Recognized actuarial loss (gain)		472			421			7			(104	)
Settlement loss		—			2,229			—			—
Net periodic benefit cost (a)	$	752		$	2,781		$	231		$	(51	)

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	Pension Benefits						Postretirement Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Service cost	$	1,102		$	1,295		$	541		$	388
Interest cost		1,227			1,238			471			282
Expected return on plan assets		(1,781	)		(2,307	)		—			—
Amortization of prior service cost		—			—			(564	)		(565	)
Recognized actuarial loss (gain)		863			818			14			(207	)
Settlement loss		—			2,616			—			—
Net periodic benefit cost (a)	$	1,411		$	3,660		$	462		$	(102	)

(a) The components of net periodic benefit cost other than the service cost component are included in Other income (expense), net in the Consolidated Statements of Income.

NOTE 8 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The reclassifications out of Accumulated other comprehensive income (loss) as reported in the Consolidated Statements of Income are:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Pension and other postretirement benefits:
Recognized actuarial loss (a)	$	479		$	317		$	877		$	611
Settlement loss (b)		—			2,229			—			2,616
Total before income tax	$	479		$	2,546		$	877		$	3,227
Income tax		(101	)		(625	)		(183	)		(796	)
Net of income tax	$	378		$	1,921		$	694		$	2,431

(a) The recognized actuarial loss is included in Other income (expense), net in the Consolidated Statements of Income.

(b) The settlement loss is included in Other income (expense), net in the Consolidated Statements of Income.

The components of Accumulated other comprehensive income (loss) as reported in the Consolidated Balance Sheets are:

	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018	$	(8,243	)	$	(15,180	)	$	(23,423	)
Reclassification adjustments		—			877			877
Current period benefit		431			—			431
Income tax benefit (charge)		—			(183	)		(183	)
Balance at June 30, 2019	$	(7,812	)	$	(14,486	)	$	(22,298	)

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	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2017	$	(5,321	)	$	(7,188	)	$	(12,509	)
Reclassification adjustments		—			3,227			3,227
Current period benefit		(1,666	)		—			(1,666	)
Income tax charge		—			(796	)		(796	)
Balance at June 30, 2018	$	(6,987	)	$	(4,757	)	$	(11,744	)

NOTE 9 - LEASES

On January 1, 2019, the Company adopted ASU 2016-02 using the modified retrospective method as of the effective date of January 1, 2019 (the effective date method). Under the effective date method, financial results reported in periods prior to 2019 are unchanged. In transition to the new lease guidance, the Company elected the package of practical expedients permitted under the transition guidance within the new standard that allowed the Company to not reassess whether a contract is or contains a lease, lease classification and initial direct costs; however, the Company did not elect the hindsight transitional practical expedient. The Company has also elected the practical expedient to not account for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the nonlease components. After assessment of the cumulative impact of adopting ASU 2016-02, it was determined that the cumulative effect adjustment required under the new guidance was immaterial and therefore the Company did not record a retrospective adjustment to the opening balance of retained earnings at January 1, 2019. The Company recognized additional operating lease right-of-use assets and lease liabilities of $1.6 million as of January 1, 2019.

The Company is currently a lessee under a number of operating leases and two finance leases for certain offices, manufacturing facilities, land, office equipment and automobiles, none of which are material to its operations. The Company’s leases generally have remaining lease terms of 1 year to 5 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. These leases do not have significant rent escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses. Further, the leases do not contain contingent rent provisions.

Supplemental information related to leases and the Company’s Consolidated Financial Statements is as follows:

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Components of lease costs:
Operating lease costs	$	140	$	267
Short-term lease costs		65		176
Finance lease costs		31		36
Total lease costs	$	236	$	479

	As of June 30, 2019
Weighted average remaining lease term (years):
Operating leases		3.0
Finance lease		4.8
Weighted average discount rate:
Operating leases		3.25	%
Finance lease		3.25	%

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	As of June 30, 2019
	Operating Leases		Financing Leases		Total Leases
Other assets - right-of-use assets	$	1,317	$	606	$	1,923
Lease liabilities included in:
Accrued expenses - current portion of lease liabilities	$	609	$	120	$	729
Other long-term liabilities - non-current portion of lease liabilities		707		488		1,195
Total lease liabilities	$	1,316	$	608	$	1,924

Maturities of lease liabilities are as follows:

	As of June 30, 2019			As of December 31, 2018
2019	$	442		$	702
2020		592			411
2021		428			260
2022		292			124
2023		220			75
Thereafter		45			10
Total lease payments	$	2,019		$	1,582
Less: Interest		(95	)
Present value of lease liabilities	$	1,924

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Amounts in tables in thousands of dollars, except for per share amounts)

The following discussion and analysis of the Company’s financial condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements, and notes thereto, and the other financial data included elsewhere in this Quarterly Report on Form 10-Q. The following discussion should also be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its Annual Report on Form 10-K for the year ended December 31, 2018.

Executive Overview

The following discussion of Results of Operations includes certain non-GAAP financial data and measures such as adjusted earnings before interest, taxes, depreciation and amortization and adjusted earnings per share amounts which exclude non-cash pension settlement charges in 2018. Management utilizes these adjusted financial data and measures to assess comparative operations against those of prior periods without the distortion of non-comparable factors. The Gorman-Rupp Company believes that these non-GAAP financial data and measures also will be useful to investors in assessing the strength of the Company’s underlying operations from period to period. Provided below is a reconciliation of adjusted earnings per share amounts and adjusted earnings before interest, taxes, depreciation and amortization.

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	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Adjusted earnings per share:
Reported earnings per share – GAAP basis	$	0.40	$	0.39	$	0.68	$	0.76
Plus pension settlement charge per share		—		0.07		—		0.08
Non-GAAP adjusted earnings per share	$	0.40	$	0.46	$	0.68	$	0.84
Adjusted earnings before interest, taxes, depreciation and amortization:
Reported net income–GAAP basis	$	10,480	$	10,173	$	17,702	$	19,790
Plus income taxes		2,955		2,413		4,975		5,452
Plus depreciation and amortization		3,529		3,610		7,095		7,210
Non-GAAP earnings before interest, taxes, depreciation and amortization		16,964		16,196		29,772		32,452
Plus pension settlement charge		—		2,229		—		2,616
Non-GAAP adjusted earnings before interest, taxes, depreciation and amortization	$	16,964	$	18,425	$	29,772	$	35,068

The Gorman-Rupp Company (“we”, “our”, “Gorman-Rupp” or the “Company”) is a leading designer, manufacturer and international marketer of pumps and pump systems for use in diverse water, wastewater, construction, dewatering, industrial, petroleum, original equipment, agriculture, fire protection, heating, ventilating and air conditioning (HVAC), military and other liquid-handling applications. The Company attributes its success to long-term product quality, applications and performance combined with timely delivery and service, and continually seeks to develop initiatives to improve performance in these key areas.

Gorman-Rupp actively pursues growth opportunities through organic growth, international business expansion and acquisitions.

We regularly invest in training for our employees, in new product development and in modern manufacturing equipment, technology and facilities all designed to increase production efficiency and capacity and drive growth by delivering innovative solutions to our customers. We believe that the diversity of our markets is a major contributor to the generally stable financial growth we have produced over the past 85 years.

The Company places a strong emphasis on cash flow generation and maintaining excellent liquidity and financial flexibility. This focus has afforded us the ability to reinvest our cash resources and preserve a strong balance sheet to position us for future acquisition and product development opportunities. The Company had no bank debt as of June 30, 2019. The Company’s cash position increased $15.7 million during the first six months of 2019 to $62.2 million at June 30, 2019 and the Company generated $17.0 million in adjusted earnings before interest, taxes, depreciation and amortization during the same period.

Capital expenditures for the first six months of 2019 were $3.5 million and consisted primarily of machinery and equipment. Capital expenditures for 2019 are presently planned to be in the range of $15-$20 million primarily for building expansion and machinery and equipment purchases, and are expected to be financed through internally-generated funds.

Net sales for the second quarter of 2019 were $108.3 million compared to record net sales of $111.8 million for the second quarter of 2018, a decrease of 3.1% or $3.5 million. Domestic sales increased 4.6% or $3.3 million while international sales decreased 16.8% or $6.8 million compared to the same period in 2018.

Gross profit was $28.2 million for the second quarter of 2019, resulting in gross margin of 26.0%, compared to gross profit of $29.9 million and gross margin of 26.7% for the same period in 2018. Material costs as a percentage of sales were flat in the second quarter of 2019 compared to the same period last year as selling price increases implemented at the beginning of 2019 were realized. The 70 basis points decrease in gross margin was due principally to the loss of leverage from lower sales volume compared to the second quarter of 2018.

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Selling, general and administrative (“SG&A”) expenses were $15.0 million and 13.8% of net sales for the second quarter of 2019 compared to $14.9 million and 13.3% of net sales for the same period in 2018. SG&A expenses as a percentage of sales increased 50 basis points due principally to the loss of leverage from lower sales volume.

Operating income was $13.2 million, resulting in operating margin of 12.2%, for the second quarter of 2019, compared to operating income of $15.0 million and operating margin of 13.4% for the same period in 2018. Operating margin decreased 120 basis points due principally to the loss of leverage from lower sales volume.

The Company’s effective tax rate increased to 22.0% for the second quarter of 2019 from 19.2% for the second quarter of 2018 due primarily to pension plan contributions made in the second quarter of 2018 which were eligible for tax deduction at the prior 35.0% federal corporate tax rate.

Net income was $10.5 million for the second quarter of 2019 compared to $10.2 million in the second quarter of 2018, and earnings per share were $0.40 and $0.39 for the respective periods. A non-cash pension settlement charge reduced second quarter of 2018 earnings by $0.07 per share.

Net sales for the first six months of 2019 were $205.2 million compared to $208.4 million for the first six months of 2018, a decrease of 1.6% or $3.2 million. Domestic sales increased 4.8% or $6.6 million while international sales decreased 13.5% or $9.8 million compared to the same period in 2018.

Gross profit was $51.5 million for the first six months of 2019, resulting in gross margin of 25.1%, compared to gross profit of $56.1 million and gross margin of 26.9% for the same period in 2018. Gross margin decreased 180 basis points largely as a result of material cost increases due to inflation, tariffs and higher freight costs. Gross margin in the second quarter of 2019 improved from the first quarter of 2019 as selling price increases implemented at the beginning of the year were more fully realized.

SG&A expenses were $29.4 million and 14.3% of net sales for the first six months of 2019 compared to $29.2 million and 14.0% of net sales for the same period in 2018. SG&A expenses as a percentage of sales increased 30 basis points primarily as a result of loss of leverage from lower sales volume.

Operating income was $22.2 million, resulting in operating margin of 10.8%, for the first six months of 2019, compared to operating income of $26.8 million and operating margin of 12.9% for the same period in 2018. Operating margin decreased 210 basis points due principally to material cost increases, which were partially offset by selling price increases.

Net income was $17.7 million for the first six months of 2019 compared to $19.8 million in the first six months of 2018, and earnings per share were $0.68 and $0.76 for the respective periods. The first six months of 2018 earnings were reduced by non-cash pension settlement charges of $0.08 per share.

The Company’s backlog of orders was $107.0 million at June 30, 2019 compared to $128.9 million at June 30, 2018 and $113.7 million at December 31, 2018. The backlog at June 30, 2019 decreased 17.0% compared to June 30, 2018 driven by decreased incoming orders in several of the markets the Company serves, most notably in the fire protection, construction, industrial and municipal markets.

On July 25, 2019, the Board of Directors authorized the payment of a quarterly dividend of $0.135 per share on the common stock of the Company, payable September 10, 2019, to shareholders of record as of August 15, 2019. This will mark the 278th consecutive quarterly dividend paid by The Gorman-Rupp Company. The dividend yield at June 30, 2019 was 1.6%.

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.

Outlook

Although material costs have generally stabilized since the fourth quarter of 2018, uncertainty remains around trade policy issues and potential new tariffs. Our incoming order rate softened during the second quarter of 2019, which will make top line growth more challenging in the second half of the year. Global economic conditions impacted incoming orders in international markets, while adverse weather in many parts of the U.S. put pressure on construction projects and the agriculture market. Our underlying fundamentals remain strong and we believe that we remain well positioned to drive long-term growth.

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Our strong balance sheet provides us with the flexibility to continue to evaluate acquisition opportunities and new product development that we expect will help add value to our operations over the longer term. In addition, increased interest in flood control infrastructure, coupled with the impact of lower taxes, could be other positive factors over the next several years.

Three Months Ended June 30, 2019 vs. Three Months Ended June 30, 2018

Net Sales

	Three Months Ended June 30,
	2019		2018		$ Change			% Change
Net Sales	$	108,330	$	111,827	$	(3,497	)		(3.1	)%

Net sales for the second quarter of 2019 were $108.3 million compared to record net sales of $111.8 million for the second quarter of 2018, a decrease of 3.1% or $3.5 million. Domestic sales increased 4.6% or $3.3 million while international sales decreased 16.8% or $6.8 million compared to the same period in 2018.

Sales in our water markets decreased 4.8% or $3.8 million in the second quarter of 2019 compared to the second quarter of 2018. Sales in the fire protection market decreased $2.7 million driven primarily by softness in international markets. Sales in the municipal market decreased $0.9 million, and sales in the agriculture market decreased $0.5 million. These decreases were partially offset by increased sales in the construction market of $0.3 million.

Sales in our non-water markets increased 1.0% or $0.3 million during the second quarter of 2019 compared to the second quarter of 2018. Sales in the petroleum market increased $1.5 million driven primarily by mid-stream oil and gas customers, and sales in the OEM market increased $1.0 million primarily related to power generation equipment and services. These increases were partially offset by decreased sales in the industrial market of $2.2 million due primarily to softness in the upstream oil and gas market.

International sales were $33.5 million in the second quarter of 2019 compared to $40.3 million in the same period last year and represented 31% and 36% of total sales for the Company, respectively. International sales decreased $3.3 million in the fire protection market driven primarily by softness in the oil and gas industry and $1.7 million in the construction market due primarily to strong fleet orders last year that did not recur this year.

Cost of Products Sold and Gross Profit

	Three Months Ended June 30,
	2019			2018			$ Change			% Change
Cost of products sold	$	80,138		$	81,962		$	(1,824	)		(2.2	)%
% of Net sales		74.0	%		73.3	%
Gross Margin		26.0	%		26.7	%

Gross profit was $28.2 million for the second quarter of 2019, resulting in gross margin of 26.0%, compared to gross profit of $29.9 million and gross margin of 26.7% for the same period in 2018. Material costs as a percentage of sales were flat in the second quarter of 2019 compared to the same period last year as selling price increases implemented at the beginning of 2019 were realized. The 70 basis points decrease in gross margin was due principally to the loss of leverage from lower sales volume compared to the second quarter of 2018.

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Selling, General and Administrative (SG&A) Expenses

	Three Months Ended June 30,
	2019			2018			$ Change		% Change
Selling, general and administrative expenses	$	14,988		$	14,872		$	116		0.8	%
% of Net sales		13.8	%		13.3	%

Selling, general and administrative (“SG&A”) expenses were $15.0 million and 13.8% of net sales for the second quarter of 2019 compared to $14.9 million and 13.3% of net sales for the same period in 2018. SG&A expenses as a percentage of sales increased 50 basis points due principally to the loss of leverage from lower sales volume.

Operating Income

	Three Months Ended June 30,
	2019			2018			$ Change			% Change
Operating income	$	13,204		$	14,993		$	(1,789	)		(11.9	)%
% of Net sales		12.2	%		13.4	%

Operating income was $13.2 million, resulting in operating margin of 12.2%, for the second quarter of 2019, compared to operating income of $15.0 million and operating margin of 13.4% for the same period in 2018. Operating margin decreased 120 basis points due principally to the loss of leverage from lower sales volume.

Net Income

	Three Months Ended June 30,
	2019			2018			$ Change		% Change
Income before income taxes	$	13,435		$	12,586		$	849		6.7	%
% of Net sales		12.4	%		11.3	%
Income taxes	$	2,955		$	2,413		$	542		22.5	%
Effective tax rate		22.0	%		19.2	%
Net income	$	10,480		$	10,173		$	307		3.0	%
% of Net sales		9.7	%		9.1	%
Earnings per share	$	0.40		$	0.39		$	0.01		2.6	%

The Company’s effective tax rate increased to 22.0% for the second quarter of 2019 from 19.2% for the second quarter of 2018 due primarily to pension plan contributions made in the second quarter of 2018 which were eligible for tax deduction at the prior 35.0% federal corporate tax rate.

The increase in net income in the second quarter of 2019 compared to the same period in 2018 of $0.3 million was due primarily to a non-cash pension charge of $1.7 million, net of income taxes, in the second quarter of 2018 that did not recur in the second quarter of 2019.

Earnings per share for the second quarter of 2018 included a non-cash pension settlement charge of $0.07 per share.

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Six Months Ended June 30, 2019 vs. Six Months Ended June 30, 2018

Net Sales

	Six Months Ended June 30,
	2019		2018		$ Change			% Change
Net Sales	$	205,189	$	208,431	$	(3,242	)		(1.6	)%

Net sales for the first six months of 2019 were $205.2 million compared to $208.4 million for the first six months of 2018, a decrease of 1.6% or $3.2 million. Domestic sales increased 4.8% or $6.6 million while international sales decreased 13.5% or $9.8 million compared to the same period in 2018.

Sales in our water markets decreased 0.5% or $0.7 million in the first six months of 2019 compared to the first six months of 2018. Sales in the municipal market increased $3.7 million driven primarily by infrastructure needs domestically, and sales in the construction market increased $2.7 million due primarily to sales to rental market customers. These increases were offset by decreased sales in the fire protection market of $5.2 million driven by softness in international markets and in the agriculture market of $1.9 million primarily due to adverse weather conditions.

Sales in our non-water markets decreased 4.0% or $2.5 million during the first six months of 2019 compared to the first six months of 2018. Sales in the petroleum market increased $0.9 million driven primarily by mid-stream oil and gas customers. This increase was offset by decreased sales in the industrial market of $3.1 million due primarily to softness in the upstream oil and gas market and decreased sales in the OEM market of $0.3 million.

International sales were $62.7 million in the first six months of 2019 compared to $72.5 million in the same period last year and represented 31% and 35% of total sales for the Company, respectively. International sales decreased most notably in the fire protection, municipal and construction markets.

Cost of Products Sold and Gross Profit

	Six Months Ended June 30,
	2019			2018			$ Change		% Change
Cost of products sold	$	153,684		$	152,360		$	1,324		0.9	%
% of Net sales		74.9	%		73.1	%
Gross Margin		25.1	%		26.9	%

Gross profit was $51.5 million for the first six months of 2019, resulting in gross margin of 25.1%, compared to gross profit of $56.1 million and gross margin of 26.9% for the same period in 2018. Gross margin decreased 180 basis points largely as a result of material cost increases due to inflation, tariffs and higher freight costs. Gross margin in the second quarter of 2019 improved from the first quarter of 2019 as selling price increases implemented at the beginning of the year were more fully realized.

Selling, General and Administrative (SG&A) Expenses

	Six Months Ended June 30,
	2019			2018			$ Change		% Change
Selling, general and administrative expenses	$	29,351		$	29,228		$	123		0.4	%
% of Net sales		14.3	%		14.0	%

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SG&A expenses were $29.4 million and 14.3% of net sales for the first six months of 2019 compared to $29.2 million and 14.0% of net sales for the same period in 2018. SG&A expenses as a percentage of sales increased 30 basis points primarily as a result of loss of leverage from lower sales volume.

Operating Income

	Six Months Ended June 30,
	2019			2018			$ Change			% Change
Operating income	$	22,154		$	26,843		$	(4,689	)		(17.5	)%
% of Net sales		10.8	%		12.9	%

Operating income was $22.2 million, resulting in operating margin of 10.8%, for the first six months of 2019, compared to operating income of $26.8 million and operating margin of 12.9% for the same period in 2018. Operating margin decreased 210 basis points due principally to material cost increases, which were partially offset by selling price increases.

Net Income

	Six Months Ended June 30,
	2019			2018			$ Change			% Change
Income before income taxes	$	22,677			25,242		$	(2,565	)		(10.2	)%
% of Net sales		11.1	%		12.1	%
Income taxes	$	4,975		$	5,452		$	(477	)		(8.7	)%
Effective tax rate		21.9	%		21.6	%
Net income	$	17,702		$	19,790		$	(2,088	)		(10.6	)%
% of Net sales		8.6	%		9.5	%
Earnings per share	$	0.68		$	0.76		$	(0.08	)		(10.5	)%

The decrease in net income in the first six months of 2019 compared to the same period in 2018 of 2.1 million was due primarily to material cost increases resulting from inflation, tariffs and higher freight costs. Net income in the first six months of 2018 included a non-cash pension settlement charge $2.0 million, net of income taxes.

Earnings per share for the first six months of 2018 included a non-cash pension settlement charge of $0.08 per share.

Liquidity and Capital Resources

Cash and cash equivalents totaled $62.2 million and there was no outstanding bank debt at June 30, 2019. The Company had $24.0 million available in bank lines of credit after deducting $7.0 million in outstanding letters of credit primarily related to customer orders. The Company was in compliance with its debt covenants, including limits on additional borrowings and maintenance of certain operating and financial ratios, at June 30, 2019 and December 31, 2018.

Free cash flow, a non-GAAP measure for reporting cash flow, is defined by the Company as adjusted earnings before interest, income taxes and depreciation and amortization, less capital expenditures and dividends. The Company believes free cash flow provides investors with an important perspective on cash available for investments, acquisitions and working capital requirements.

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The following table reconciles adjusted earnings before interest, income taxes and depreciation and amortization as reconciled above to free cash flow:

	Six Months Ended June 30,
	2019			2018
Non-GAAP adjusted earnings before interest, taxes, depreciation and amortization	$	29,772		$	35,068
Less capital expenditures		(3,464	)		(5,479	)
Less cash dividends		(7,053	)		(6,527	)
Non-GAAP free cash flow	$	19,255		$	23,062

Financial Cash Flow

	Six Months Ended June 30,
	2019			2018
Beginning of period cash and cash equivalents	$	46,458		$	79,680
Net cash provided by operating activities		26,488			14,337
Net cash used for investing activities		(3,466	)		(2,510	)
Net cash used for financing activities		(7,505	)		(6,986	)
Effect of exchange rate changes on cash		190			(800	)
Net increase in cash and cash equivalents		15,707			4,041
End of period cash and cash equivalents	$	62,165		$	83,721

The increase in cash provided by operating activities in the first half of 2019 compared to the same period last year was primarily due to lower inventories driven by a planned inventory reduction and decreases in income taxes payable and pension contributions. These negative effects on cash flow were offset by valuation adjustments to prepaid pension assets.

During the first half of 2019, investing activities primarily consisted of capital expenditures for machinery and equipment of $3.5 million. During the first half of 2018, investing activities of $2.5 million primarily consisted of capital expenditures for machinery and equipment of $5.5 million partially offset by proceeds from short-term investments of $3.0 million.

Net cash used for financing activities for the first half of 2019 and 2018 primarily consisted of dividend payments of $7.1 million and $6.5 million, respectively.

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.

Critical Accounting Policies

Our critical accounting policies are described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in the notes to our Consolidated Financial Statements for the year ended December 31, 2018 contained in our Annual Report on Form 10-K for the year ended December 31, 2018. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been discussed in the notes to our Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The application of our critical accounting policies may require management to make judgments and estimates about the amounts reflected in the Consolidated Financial Statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.

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Cautionary Note Regarding Forward-Looking Statements

In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, The Gorman-Rupp Company provides the following cautionary statement: This Form 10-Q contains various forward-looking statements based on assumptions concerning The Gorman-Rupp Company’s operations, future results and prospects. These forward-looking statements are based on current expectations about important economic, political, and technological factors, among others, and are subject to risks and uncertainties, which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions.

Such factors include, but are not limited to: (1) continuation of the current and projected future business environment; (2) highly competitive markets; (3) availability and costs of raw materials, and our ability to mitigate cost increases through selling price adjustments; (4) loss of key management; (5) cyber security threats; (6) acquisition performance and integration; (7) compliance with, and costs related to, a variety of import and export laws and regulations; (8) environmental compliance costs and liabilities; (9) exposure to fluctuations in foreign currency exchange rates; (10) conditions in foreign countries in which The Gorman-Rupp Company conducts business; (11) changes in our tax rates and exposure to additional income tax liabilities; (12) impairment in the value of intangible assets, including goodwill; (13) defined benefit pension plan settlement expense; (14) family ownership of common equity; and (15) risks described from time to time in our reports filed with the Securities and Exchange Commission. Except to the extent required by law, we do not undertake and specifically decline any obligation to review or update any forward-looking statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to market risk associated principally with fluctuations in foreign currency exchange rates. The Company’s foreign currency exchange rate risk is limited primarily to the Euro, Canadian Dollar, South African Rand and British Pound. The Company manages its foreign exchange risk principally through invoicing customers in the same currency as is used in the market of the source of products. The foreign currency transaction gains (losses) for the first half of 2019 and the first half of 2018 were $74,000 and $(0.5) million, respectively, and are reported within Other income (expense), net on the Consolidated Statements of Income. Beginning on January 1, 2019, the Company began recognizing unrealized foreign exchange gains and losses within Accumulated other comprehensive loss.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. The Company’s disclosure controls and procedures are also designed to ensure that information required to be disclosed in Company reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to the Company’s management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

An evaluation was carried out under the supervision and with the participation of the Company’s management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Based on that evaluation, the principal executive officer and the principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2019.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no material changes from the legal proceedings previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

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ITEM 6. EXHIBITS

Exhibit 31.1	Certification of Jeffrey S. Gorman, Chairman, President and Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of James C. Kerr, Vice President and Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32	Certification pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section  906 of The Sarbanes-Oxley Act of 2002.
Exhibit 101	Financial statements from the Quarterly Report on Form 10-Q of The Gorman-Rupp Company for the quarter ended June 30, 2019, formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Equity, and (vi) the Notes to Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	The Gorman-Rupp Company
		(Registrant)
Date: July 30, 2019
	By:	/s/ James C. Kerr
		James C. Kerr
		Vice President and Chief Financial Officer

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EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Jeffrey S. Gorman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Gorman-Rupp Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2019	/s/ Jeffrey S. Gorman
	Jeffrey S. Gorman
	Chairman, President and Chief Executive Officer
	The Gorman-Rupp Company
	(Principal Executive Officer)

25

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, James C. Kerr, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Gorman-Rupp Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2019	/s/ James C. Kerr
	James C. Kerr
	Vice President and Chief Financial Officer
	The Gorman-Rupp Company
	(Principal Financial Officer)

26

EX-32

EXHIBIT 32

Certification Pursuant to 18 U. S. C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of The Gorman-Rupp Company on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: July 30, 2019	/s/ Jeffrey S. Gorman
	Jeffrey S. Gorman
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ James C. Kerr
	James C. Kerr
	Vice President and Chief Financial Officer
	(Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to 18 U. S. C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

27

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Jul. 26, 2019
Document Information [Line Items]
Entity Registrant Name	GORMAN RUPP CO
Entity Central Index Key	0000042682
Trading Symbol	grc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding (in shares)		26,133,393
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Title of 12(b) Security	Common Stock

XML

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net sales	$ 108,330	$ 111,827	$ 205,189	$ 208,431
Cost of products sold	80,138	81,962	153,684	152,360
Gross profit	28,192	29,865	51,505	56,071
Selling, general and administrative expenses	14,988	14,872	29,351	29,228
Operating income	13,204	14,993	22,154	26,843
Other income (expense), net	231	(2,407)	523	(1,601)
Income before income taxes	13,435	12,586	22,677	25,242
Income taxes	2,955	2,413	4,975	5,452
Net income	$ 10,480	$ 10,173	$ 17,702	$ 19,790
Earnings per share (in dollars per share)	$ 0.40	$ 0.39	$ 0.68	$ 0.76
Cash dividends per share (in dollars per share)	$ 0.135	$ 0.125	$ 0.27	$ 0.25
Average number of shares outstanding (in shares)	26,124,216	26,107,670	26,121,568	26,107,149

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net income	$ 10,480	$ 10,173	$ 17,702	$ 19,790
Other comprehensive income, net of tax:
Cumulative translation adjustments	583	(1,855)	431	(1,666)
Pension and postretirement medical liability adjustments	378	1,921	694	2,431
Other comprehensive income	961	66	1,125	765
Comprehensive income	$ 11,441	$ 10,239	$ 18,827	$ 20,555

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 62,165	$ 46,458
Accounts receivable, net	75,476	67,714
Inventories, net	78,809	87,387
Prepaid and other	4,411	7,127
Total current assets	220,861	208,686
Property, plant and equipment, net	110,526	113,493
Other assets	9,307	5,101
Prepaid pension assets	4,269	4,817
Goodwill and other intangible assets, net	35,633	36,185
Total assets	380,596	368,282
Current liabilities:
Accounts payable	14,306	16,678
Payroll and employee related liabilities	13,313	12,651
Commissions payable	8,370	9,222
Deferred revenue and customer deposits	7,260	5,232
Accrued expenses	5,845	4,682
Total current liabilities	49,094	48,465
Postretirement benefits	21,224	21,853
Other long-term liabilities	4,929	4,832
Total liabilities	75,247	75,150
Equity:
Common shares, without par value: Authorized – 35,000,000 shares; Outstanding – 26,124,393 shares at June 30, 2019 and 26,117,045 shares at December 31, 2018 (after deducting treasury shares of 924,403 and 931,751, respectively), at stated capital amounts	5,104	5,102
Additional paid-in capital	2,943	2,539
Retained earnings	319,600	308,914
Accumulated other comprehensive loss	(22,298)	(23,423)
Total equity	305,349	293,132
Total liabilities and equity	$ 380,596	$ 368,282

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - shares	Jun. 30, 2019	Dec. 31, 2018
Common shares, authorized (in shares)	35,000,000	35,000,000
Common shares, outstanding (in shares)	26,124,393	26,117,045
Treasury shares (in shares)	924,403	931,751

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities:
Net income	$ 17,702	$ 19,790
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,095	7,210
Pension expense	1,411	3,660
Contributions to pension plan		(4,000)
Stock based compensation	474	606
Changes in operating assets and liabilities:
Accounts receivable, net	(7,707)	(7,254)
Inventories, net	8,765	(5,214)
Accounts payable	(2,396)	966
Commissions payable	(836)	1,025
Deferred revenue and customer deposits	2,028	(765)
Income taxes	1,577	(3,839)
Accrued expenses and other	(900)	(2,727)
Benefit obligations	(725)	4,879
Net cash provided by operating activities	26,488	14,337
Cash used for investing activities:
Capital additions	(3,464)	(5,479)
Proceeds (purchases) of short-term investments, net	(2)	2,969
Net cash used for investing activities	(3,466)	(2,510)
Cash used for financing activities:
Cash dividends	(7,053)	(6,527)
Other	(452)	(459)
Net cash used for financing activities	(7,505)	(6,986)
Effect of exchange rate changes on cash	190	(800)
Net increase in cash and cash equivalents	15,707	4,041
Cash and cash equivalents:
Beginning of period	46,458	79,680
End of period	$ 62,165	$ 83,721

XML

Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balances (in shares) at Dec. 31, 2017	26,106,623
Balance at Dec. 31, 2017	$ 5,100	$ 526	$ 332,378	$ (12,509)	$ 325,495
Net income			9,617		9,617
Other comprehensive income				699	699
Cash dividends			(3,263)		(3,263)
Balances (in shares) at Mar. 31, 2018	26,106,623
Balance at Mar. 31, 2018	$ 5,100	526	338,732	(11,810)	332,548
Balances (in shares) at Dec. 31, 2017	26,106,623
Balance at Dec. 31, 2017	$ 5,100	526	332,378	(12,509)	325,495
Net income					19,790
Other comprehensive income					765
Balances (in shares) at Jun. 30, 2018	26,108,045
Balance at Jun. 30, 2018	$ 5,100	564	345,647	(11,744)	339,567
Balances (in shares) at Mar. 31, 2018	26,106,623
Balance at Mar. 31, 2018	$ 5,100	526	338,732	(11,810)	332,548
Net income			10,173		10,173
Other comprehensive income				66	66
Stock based compensation (in shares)	1,422
Stock based compensation		38	6		44
Cash dividends			(3,264)		(3,264)
Balances (in shares) at Jun. 30, 2018	26,108,045
Balance at Jun. 30, 2018	$ 5,100	564	345,647	(11,744)	339,567
Balances (in shares) at Dec. 31, 2018	26,117,045
Balance at Dec. 31, 2018	$ 5,102	2,539	308,914	(23,423)	293,132
Net income			7,222		7,222
Other comprehensive income				164	164
Stock based compensation (in shares)	6,647
Stock based compensation	$ 1	(81)	35		(45)
Cash dividends			(3,526)		(3,526)
Balances (in shares) at Mar. 31, 2019	26,123,692
Balance at Mar. 31, 2019	$ 5,103	2,458	312,645	(23,259)	296,947
Balances (in shares) at Dec. 31, 2018	26,117,045
Balance at Dec. 31, 2018	$ 5,102	2,539	308,914	(23,423)	293,132
Net income					17,702
Other comprehensive income					1,125
Balances (in shares) at Jun. 30, 2019	26,124,393
Balance at Jun. 30, 2019	$ 5,104	2,943	319,600	(22,298)	305,349
Balances (in shares) at Mar. 31, 2019	26,123,692
Balance at Mar. 31, 2019	$ 5,103	2,458	312,645	(23,259)	296,947
Net income			10,480		10,480
Other comprehensive income				961	961
Stock based compensation (in shares)	701
Stock based compensation	$ 1	485	2		488
Cash dividends			(3,527)		(3,527)
Balances (in shares) at Jun. 30, 2019	26,124,393
Balance at Jun. 30, 2019	$ 5,104	$ 2,943	$ 319,600	$ (22,298)	$ 305,349

XML

Consolidated Statements of Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018
Retained Earnings [Member]
Cash dividends, amount per share (in dollars per share)	$ 0.135	$ 0.135	$ 0.125	$ 0.125
Cash dividends, amount per share (in dollars per share)	$ 0.135		$ 0.125

XML

Note 1 - Basis of Presentation of Financial Statements

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Basis of Accounting [Text Block]

NOTE

1

- BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form

10

-Q and do

not

include all of the information and footnotes required by U.S. GAAP for complete financial statements. The Consolidated Financial Statements include the accounts of The Gorman-Rupp Company (the “Company” or “Gorman-Rupp”) and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management of the Company, all adjustments considered necessary for a fair presentation have been included. Operating results for the

six

months ended

June 30, 2019

are

not

necessarily indicative of results that

may

be expected for the year ending

December 

31,

2019.

For further information, refer to the Consolidated Financial Statements and accompanying notes included in the Company’s Annual Report on Form

10

-K for the year ended

December 

31,

2018,

from which related information herein has been derived.

XML

Note 2 - Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE

2

- RECENTLY ISSUED ACCOUNTING STANDARDS

The Company considers the applicability and impact of all Accounting Standard Updates (“ASUs”). ASUs

not

listed below were assessed and determined either to be

not

applicable or are expected to have minimal impact on the Company’s Consolidated Financial Statements.

Recently Adopted Accounting Standards

In

February 2016,

the FASB issued ASU

2016

-

02,

“Leases (Topic

842

),” which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with a term of more than

one

year. Accounting by lessors remains similar to pre-existing U.S. GAAP. Subsequent accounting standards updates have been issued, which amend and/or clarify the application of ASU

2016

-

02.

The Company adopted Topic

842

effective

January 1, 2019.

See Note

9,

Leases for further details.

XML

Note 3 - Revenue

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE

3

– REVENUE

Disaggregation of Revenue

The following tables disaggregate total net sales by major product category and geographic location:

	Product Category
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Pumps and pump systems	$	92,167	$	97,784	$	174,688	$	178,611
Repair parts for pumps and pump systems and other		16,163		14,043		30,501		29,820
Total net sales	$	108,330	$	111,827	$	205,189	$	208,431

	Geographic Location
	Three Months Ended June 30,				Six Months Ended June 30,
	201 9		201 8		2019		2018
United States	$	74,784	$	71,519	$	142,485	$	135,952
Foreign countries		33,546		40,308		62,704		72,479
Total net sales	$	108,330	$	111,827	$	205,189	$	208,431

International sales represented approximately

31%

and

36%

of total net sales for the

second

quarter of

2019

and

2018,

respectively, and were made to customers in many different countries around the world.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account in ASC Topic

606.

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. For product sales, other than long-term construction-type contracts, the Company recognizes revenue once control has passed at a point in time, which is generally when products are shipped. Payments received for product sales typically occur following delivery and the satisfaction of the performance obligation based upon the terms outlined in the contracts. Substantially all of our customer contracts are fixed-price contracts and the majority of our customer contracts have a single performance obligation, as the promise to transfer the individual products or services is

not

separately identifiable from other promises in the contract. 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.

All of the Company's performance obligations, and associated revenue, are generally transferred to customers at a point in time, with the exception of certain highly customized pump products, which are transferred to the customer over time.

The Company offers standard warranties for its products to ensure that its products comply with agreed-upon specifications in its contracts. For standard warranties, these do

not

give rise to performance obligations and represent assurance-type warranties.

Shipping and handling activities related to products sold to customers, whether performed before or after the customer obtains control of the products, are generally accounted for as activities to fulfill the promise to transfer the products and

not

as a separate performance obligation.

On

June 30, 2019,

the Company had

$107.0

million of remaining performance obligations, also referred to as backlog. The Company expects to recognize as revenue substantially all of its remaining performance obligations within

one

year.

Contract Estimates

Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, the Company estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognizes that profit as performance obligations are satisfied. Contract estimates are based on various assumptions to project the outcome of future events that could span longer than

one

year. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and the performance of subcontractors as applicable.

As a significant change in

one

or more of these estimates could affect the profitability of our contracts, the Company reviews and updates its contract-related estimates regularly. Adjustments in estimated profit on contracts are accounted for under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) in the Consolidated Balance Sheets. For certain highly customized pump products, revenue is recognized over time before the customer is invoiced, resulting in contract assets. Sometimes the Company receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These contract assets and liabilities are reported in the Consolidated Balance Sheets as a component of Other assets and Deferred revenue and customer deposits, respectively, on a contract-by-contract basis at the end of each reporting period.

The Company’s contract assets and liabilities as of

June 30, 2019

and

December 31, 2018,

respectively, were as follows:

	June 3 0 , 201 9		December 31 , 201 8
Contract assets	$	801	$	1,953
Contract liabilities	$	7,260	$	5,232

Revenue recognized for the

six

months ended

June 30, 2019

and

2018

that was included in the contract liabilities balance at the beginning of the period was

$4.9

million and

$3.3

million, respectively.

XML

Note 4 - Inventories

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

4

- INVENTORIES

LIFO inventories are stated at the lower of cost or market and all other inventories are stated at the lower of cost or net realizable value. Replacement cost approximates current cost and the excess over LIFO cost is approximately

$65.2

million and

$63.7

million at

June 30, 2019

and

December 

31,

2018,

respectively. Allowances for excess and obsolete inventory totaled

$5.4

million and

$5.3

million at

June 30, 2019

and

December 

31,

2018,

respectively. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels and costs at that time. Interim LIFO calculations are based on management’s estimate of expected year-end inventory levels and costs, and are subject to the final year-end LIFO inventory valuation.

Inventories are comprised of the following:

	June 3 0 , 2019		December 31, 2018
Inventories, net:
Raw materials and in-process	$	17,985	$	21,773
Finished parts		50,584		54,209
Finished products		10,240		11,405
Total net inventories	$	78,809	$	87,387

XML

Note 5 - Property, Plant and Equipment

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

5

– PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consist of the following:

	June 3 0 , 2019			December 31, 2018
Land	$	3,876		$	3,869
Buildings		107,676			106,940
Machinery and equipment		180,338			177,668
		291,890			288,477
Less accumulated depreciation		(181,364	)		(174,984	)
Property, plant and equipment, net	$	110,526		$	113,493

XML

Note 6 - Product Warranties

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Product Warranty Disclosure [Text Block]

NOTE

6

- PRODUCT WARRANTIES

A liability is established for estimated future warranty and service claims based on historical claims experience and specific product failures. The Company expenses warranty costs directly to Cost of products sold. Changes in the Company’s product warranties liability are:

	June 3 0,
	2019			2018
Balance at beginning of year	$	1,380		$	1,098
Provision		948			586
Claims		(822	)		(686	)
Balance at end of period	$	1,506		$	998

XML

Note 7 - Pension and Other Postretirement Benefits

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE

7

- PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company sponsors a defined benefit pension plan (“Plan”) covering certain domestic employees. Benefits are based on each covered employee’s years of service and compensation. The Plan is funded in conformity with the funding requirements of applicable U.S. regulations. The Plan was closed to new participants effective

January 

1,

2008.

Employees hired after this date, in eligible locations, participate in an enhanced

401

(k) plan instead of the defined benefit pension plan. Employees hired prior to this date continue to accrue benefits.

Additionally, the Company sponsors defined contribution pension plans made available to all domestic and Canadian employees. The Company funds the cost of these benefits as incurred.

The Company also sponsors a non-contributory defined benefit postretirement health care plan that provides health benefits to certain domestic and Canadian retirees and eligible spouses and dependent children. The Company funds the cost of these benefits as incurred.

The following tables present the components of net periodic benefit costs:

	Pension Benefits						Postretirement Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	201 9			201 8			201 9			201 8
Service cost	$	535		$	602		$	270		$	194
Interest cost		581			632			236			141
Expected return on plan assets		(836	)		(1,103	)		-			-
Amortization of prior service cost		-			-			(282	)		(282	)
Recognized actuarial loss (gain)		472			421			7			(104	)
Settlement loss		-			2,229			-			-
Net periodic benefit cost (a)	$	752		$	2,781		$	231		$	(51	)

	Pension Benefits						Postretirement Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Service cost	$	1,102		$	1,295		$	541		$	388
Interest cost		1,227			1,238			471			282
Expected return on plan assets		(1,781	)		(2,307	)		-			-
Amortization of prior service cost		-			-			(564	)		(565	)
Recognized actuarial loss (gain)		863			818			14			(207	)
Settlement loss		-			2,616			-			-
Net periodic benefit cost (a)	$	1,411		$	3,660		$	462		$	(102	)

(a) The components of net periodic benefit cost other than the service cost component are included in Other income (expense), net in the Consolidated Statements of Income.

XML

Note 8 - Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

NOTE

8

– ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The reclassifications out of Accumulated other comprehensive income (loss) as reported in the Consolidated Statements of Income are:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Pension and other postretirement benefits:
Recognized actuarial loss (a)	$	479		$	317		$	877		$	611
Settlement loss (b)		-			2,229			-			2,616
Total before income tax	$	479		$	2,546		$	877		$	3,227
Income tax		(101	)		(625	)		(183	)		(796	)
Net of income tax	$	378		$	1,921		$	694		$	2,431

(a) The recognized actuarial loss is included in Other income (expense), net in the Consolidated Statements of Income.

(b) The settlement loss is included in Other income (expense), net in the Consolidated Statements of Income.

The components of Accumulated other comprehensive income (loss) as reported in the Consolidated Balance Sheets are:

	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018	$	(8,243	)	$	(15,180	)	$	(23,423	)
Reclassification adjustments		-			877			877
Current period benefit		431			-			431
Income tax benefit (charge)		-			(183	)		(183	)
Balance at June 30, 2019	$	(7,812	)	$	(14,486	)	$	(22,298	)

	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2017	$	(5,321	)	$	(7,188	)	$	(12,509	)
Reclassification adjustments		-			3,227			3,227
Current period benefit		(1,666	)		-			(1,666	)
Income tax charge		-			(796	)		(796	)
Balance at June 30, 2018	$	(6,987	)	$	(4,757	)	$	(11,744	)

XML

Note 9 - Leases

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Leases of Lessee Disclosure [Text Block]

NOTE

9

– LEASES

On

January 1, 2019,

the Company adopted ASU

2016

-

02

using the modified retrospective method as of the effective date of

January 1, 2019 (

the effective date method). Under the effective date method, financial results reported in periods prior to

2019

are unchanged. In transition to the new lease guidance, the Company elected the package of practical expedients permitted under the transition guidance within the new standard that allowed the Company to

not

reassess whether a contract is or contains a lease, lease classification and initial direct costs; however, the Company did

not

elect the hindsight transitional practical expedient. The Company has also elected the practical expedient to

not

account for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the nonlease components. After assessment of the cumulative impact of adopting ASU

2016

-

02,

it was determined that the cumulative effect adjustment required under the new guidance was immaterial and therefore the Company did

not

record a retrospective adjustment to the opening balance of retained earnings at

January 1, 2019.

The Company recognized additional operating lease right-of-use assets and lease liabilities of

$1.6

million as of

January 1, 2019.

The Company is currently a lessee under a number of operating leases and

two

finance leases for certain offices, manufacturing facilities, land, office equipment and automobiles,

none

of which are material to its operations. The Company’s leases generally have remaining lease terms of

1

year to

5

years, some of which include options to extend the leases for up to

5

years, and some of which include options to terminate the leases within

1

year. These leases do

not

have significant rent escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses. Further, the leases do

not

contain contingent rent provisions.

Supplemental information related to leases and the Company’s Consolidated Financial Statements is as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2019		2019
Components of lease costs:
Operating lease costs	$	140	$	267
Short-term lease costs		65		176
Finance lease costs		31		36
Total lease costs	$	236	$	479

	As of June 30, 2019
Weighted average remaining lease term (years):
Operating leases		3.0
Finance lease		4.8
Weighted average discount rate:
Operating leases		3.25	%
Finance lease		3.25	%

	As of June 30, 2019
	Operating Leases		Financing Leases		Total Leases
Other assets - right-of-use assets	$	1,317	$	606	$	1,923
Lease liabilities included in:
Accrued expenses - current portion of lease liabilities	$	609	$	120	$	729
Other long-term liabilities - non-current portion of lease liabilities		707		488		1,195
Total lease liabilities	$	1,316	$	608	$	1,924

Maturities of lease liabilities are as follows:

	As of June 3 0 , 2019			As of December 31, 2018
2019	$	442		$	702
2020		592			411
2021		428			260
2022		292			124
2023		220			75
Thereafter		45			10
Total lease payments	$	2,019		$	1,582
Less: Interest		(95	)
Present value of lease liabilities	$	1,924

XML

Note 3 - Revenue (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Product Category
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Pumps and pump systems	$	92,167	$	97,784	$	174,688	$	178,611
Repair parts for pumps and pump systems and other		16,163		14,043		30,501		29,820
Total net sales	$	108,330	$	111,827	$	205,189	$	208,431

	Geographic Location
	Three Months Ended June 30,				Six Months Ended June 30,
	201 9		201 8		2019		2018
United States	$	74,784	$	71,519	$	142,485	$	135,952
Foreign countries		33,546		40,308		62,704		72,479
Total net sales	$	108,330	$	111,827	$	205,189	$	208,431

Contract with Customer, Asset and Liability [Table Text Block]

	June 3 0 , 201 9		December 31 , 201 8
Contract assets	$	801	$	1,953
Contract liabilities	$	7,260	$	5,232

XML

Note 4 - Inventories (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 3 0 , 2019		December 31, 2018
Inventories, net:
Raw materials and in-process	$	17,985	$	21,773
Finished parts		50,584		54,209
Finished products		10,240		11,405
Total net inventories	$	78,809	$	87,387

XML

Note 5 - Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	June 3 0 , 2019			December 31, 2018
Land	$	3,876		$	3,869
Buildings		107,676			106,940
Machinery and equipment		180,338			177,668
		291,890			288,477
Less accumulated depreciation		(181,364	)		(174,984	)
Property, plant and equipment, net	$	110,526		$	113,493

XML

Note 6 - Product Warranties (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Product Warranty Liability [Table Text Block]

	June 3 0,
	2019			2018
Balance at beginning of year	$	1,380		$	1,098
Provision		948			586
Claims		(822	)		(686	)
Balance at end of period	$	1,506		$	998

XML

Note 7 - Pension and Other Postretirement Benefits (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Schedule of Costs of Retirement Plans [Table Text Block]

	Pension Benefits						Postretirement Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	201 9			201 8			201 9			201 8
Service cost	$	535		$	602		$	270		$	194
Interest cost		581			632			236			141
Expected return on plan assets		(836	)		(1,103	)		-			-
Amortization of prior service cost		-			-			(282	)		(282	)
Recognized actuarial loss (gain)		472			421			7			(104	)
Settlement loss		-			2,229			-			-
Net periodic benefit cost (a)	$	752		$	2,781		$	231		$	(51	)

	Pension Benefits						Postretirement Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Service cost	$	1,102		$	1,295		$	541		$	388
Interest cost		1,227			1,238			471			282
Expected return on plan assets		(1,781	)		(2,307	)		-			-
Amortization of prior service cost		-			-			(564	)		(565	)
Recognized actuarial loss (gain)		863			818			14			(207	)
Settlement loss		-			2,616			-			-
Net periodic benefit cost (a)	$	1,411		$	3,660		$	462		$	(102	)

XML

Note 8 - Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Pension and other postretirement benefits:
Recognized actuarial loss (a)	$	479		$	317		$	877		$	611
Settlement loss (b)		-			2,229			-			2,616
Total before income tax	$	479		$	2,546		$	877		$	3,227
Income tax		(101	)		(625	)		(183	)		(796	)
Net of income tax	$	378		$	1,921		$	694		$	2,431

Comprehensive Income (Loss) [Table Text Block]

	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018	$	(8,243	)	$	(15,180	)	$	(23,423	)
Reclassification adjustments		-			877			877
Current period benefit		431			-			431
Income tax benefit (charge)		-			(183	)		(183	)
Balance at June 30, 2019	$	(7,812	)	$	(14,486	)	$	(22,298	)

	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2017	$	(5,321	)	$	(7,188	)	$	(12,509	)
Reclassification adjustments		-			3,227			3,227
Current period benefit		(1,666	)		-			(1,666	)
Income tax charge		-			(796	)		(796	)
Balance at June 30, 2018	$	(6,987	)	$	(4,757	)	$	(11,744	)

XML

Note 9 - Leases (Tables)

6 Months Ended

Jun. 30, 2019

Notes Tables

Lease, Cost [Table Text Block]

	Three Months Ended June 30,		Six Months Ended June 30,
	2019		2019
Components of lease costs:
Operating lease costs	$	140	$	267
Short-term lease costs		65		176
Finance lease costs		31		36
Total lease costs	$	236	$	479

Schedule of Lessee, Leases, Weighted Average Remaining Term and Discount Rate [Table Text Block]

	As of June 30, 2019
Weighted average remaining lease term (years):
Operating leases		3.0
Finance lease		4.8
Weighted average discount rate:
Operating leases		3.25	%
Finance lease		3.25	%

Schedule of Components of Lease Assets and Liabilities [Table Text Block]

<div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style="; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px; min-; min-width: 700px;"> <tr style="vertical-align: bottom;"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="10" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">As of June 30, 2019</div></div></div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Operating Leases</div></div></div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Financing Leases</div></div></div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td colspan="2" style="text-align: center; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Total Leases</div></div></div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> </tr> <tr style="vertical-align: bottom;"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 55%;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Other assets - right-of-use assets</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,317</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">606</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,923</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Lease liabilities included in:</div> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="text-align: left; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Accrued expenses - current portion of lease liabilities</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">609</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">120</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">729</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Other long-term liabilities - non-current portion of lease liabilities</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">707</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">488</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 1px;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> </td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,195</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Total lease liabilities</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,316</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">608</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 12%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,924</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;"> </td> </tr> </table></div>

Lessee, Lease Liability, Maturity [Table Text Block]

	As of June 3 0 , 2019			As of December 31, 2018
2019	$	442		$	702
2020		592			411
2021		428			260
2022		292			124
2023		220			75
Thereafter		45			10
Total lease payments	$	2,019		$	1,582
Less: Interest		(95	)
Present value of lease liabilities	$	1,924

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Note 3 - Revenue 1 (Details Textual) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Contract with Customer, Liability, Revenue Recognized			$ 4.9	$ 3.3
Non-US [Member]
Percentage Revenue By Location	31.00%	36.00%

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Note 3 - Revenue 2 (Details Textual) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 $ in Millions	Jun. 30, 2019 USD ($)
Revenue, Remaining Performance Obligation, Amount	$ 107.0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year

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Note 3 - Revenue - Disaggregation of Revenue by Major Categories and Geographic Location (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net sales	$ 108,330	$ 111,827	$ 205,189	$ 208,431
UNITED STATES
Net sales	74,784	71,519	142,485	135,952
Non-US [Member]
Net sales	33,546	40,308	62,704	72,479
Pumps and Pump Systems [Member]
Net sales	92,167	97,784	174,688	178,611
Repair Parts for Pumps and Pump Systems and Other [Member]
Net sales	$ 16,163	$ 14,043	$ 30,501	$ 29,820

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Note 3 - Revenue - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Contract assets	$ 801	$ 1,953
Contract liabilities	$ 7,260	$ 5,232

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Note 4 - Inventories (Details Textual) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Inventory, LIFO Reserve	$ 65.2	$ 63.7
Inventory Valuation Reserves, Ending Balance	$ 5.4	$ 5.3

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Note 4 - Inventories - Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Raw materials and in-process	$ 17,985	$ 21,773
Finished parts	50,584	54,209
Finished products	10,240	11,405
Total net inventories	$ 78,809	$ 87,387

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Note 5 - Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Property, plant and equipment, gross	$ 291,890	$ 288,477
Less accumulated depreciation	(181,364)	(174,984)
Property, plant and equipment, net	110,526	113,493
Land [Member]
Property, plant and equipment, gross	3,876	3,869
Building [Member]
Property, plant and equipment, gross	107,676	106,940
Machinery and Equipment [Member]
Property, plant and equipment, gross	$ 180,338	$ 177,668

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Note 6 - Product Warranties - Product Warranties (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Balance at beginning of year	$ 1,380	$ 1,098
Provision	948	586
Claims	(822)	(686)
Balance at end of period	$ 1,506	$ 998

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Note 7 - Pension and Other Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Pension Plan [Member]
Service cost	$ 535	$ 602	$ 1,102	$ 1,295
Interest cost	581	632	1,227	1,238
Expected return on plan assets	(836)	(1,103)	(1,781)	(2,307)
Amortization of prior service cost
Recognized actuarial loss (gain)	472	421	863	818
Settlement loss		2,229		2,616
Net periodic benefit cost (a)	752	2,781	1,411	3,660
Postemployment Retirement Benefits [Member]
Service cost	270	194	541	388
Interest cost	236	141	471	282
Expected return on plan assets
Amortization of prior service cost	(282)	(282)	(564)	(565)
Recognized actuarial loss (gain)	7	(104)	14	(207)
Settlement loss
Net periodic benefit cost (a)	$ 231	$ (51)	$ 462	$ (102)

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Note 8 - Accumulated Other Comprehensive Income (Loss) - Reclassification Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Total before income tax		$ (13,435)	$ (12,586)	$ (22,677)	$ (25,242)
Income tax		2,955	2,413	4,975	5,452
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Recognized actuarial loss	[1]	479	317	877	611
Settlement loss	[2]		2,229		2,616
Total before income tax		479	2,546	877	3,227
Income tax		(101)	(625)	(183)	(796)
Net of income tax		$ 378	$ 1,921	$ 694	$ 2,431

[1] The recognized actuarial loss is included in Other income (expense), net in the Consolidated Statements of Income.

[2] The settlement loss is included in Other income (expense), net in the Consolidated Statements of Income.

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Note 8 - Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Loss) Reported in the Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Balance	$ 293,132	$ 325,495
Balance	305,349	339,567
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Balance	(8,243)	(5,321)
Reclassification adjustments
Current period benefit	431	(1,666)
Income tax benefit (charge)
Balance	(7,812)	(6,987)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Balance	(15,180)	(7,188)
Reclassification adjustments	877	3,227
Current period benefit
Income tax benefit (charge)	(183)	(796)
Balance	(14,486)	(4,757)
AOCI Attributable to Parent [Member]
Balance	(23,423)	(12,509)
Reclassification adjustments	877	3,227
Current period benefit	431	(1,666)
Income tax benefit (charge)	(183)	(796)
Balance	$ (22,298)	$ (11,744)

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Note 9 - Leases (Details Textual) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jan. 01, 2019
Operating Lease, Liability, Total	$ 1,316	$ 1,600
Lessee, Operating Lease, Renewal Term	5 years
Operating Lease, Right-of-Use Asset	$ 1,317	$ 1,600
Minimum [Member]
Lessee, Remaining Lease Term	1 year
Maximum [Member]
Lessee, Remaining Lease Term	5 years

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Note 9 - Leases - Supplement Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Operating lease costs	$ 140	$ 267
Short-term lease costs	65	176
Finance lease costs	31	36
Total lease costs	$ 236	$ 479

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Note 9 - Leases - Weighted Average Remaining Lease Term and Discount Rate (Details)	Jun. 30, 2019
Operating leases (Year)	3 years
Finance lease (Year)	4 years 292 days
Operating leases	3.25%
Finance lease	3.25%

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Note 9 - Leases - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Other assets - right-of-use assets, operating leases	$ 1,317	$ 1,600
Other assets - right-of-use assets, financing leases	606
Other assets - right-of-use assets, total	1,923
Total lease liabilities, operating leases	1,316	$ 1,600
Total lease liabilities, financing leases	608
Present value of lease liabilities	1,924
Accrued Expenses [Member]
Accrued expenses - current portion of lease liabilities, operating leases	609
Accrued expenses - current portion of lease liabilities, financing leases	120
Accrued expenses - current portion of lease liabilities, total	729
Other Noncurrent Liabilities [Member]
Other long-term liabilities - non-current portion of lease liabilities, operating leases	707
Other long-term liabilities - non-current portion of lease liabilities, financing leases	488
Other long-term liabilities - non-current portion of lease liabilities, total	$ 1,195

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Note 9 - Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
2019	$ 442	$ 702
2020	592	411
2021	428	260
2022	292	124
2023	220	75
Thereafter	45	10
Total lease payments	2,019	1,582
Less: Interest	(95)
Present value of lease liabilities	$ 1,924