The Gorman-Rupp Company — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for Q3 2026 reached a record $193.3 million, an 11.8% increase ($20.4 million) compared to $172.8 million in Q3 2025.
• Net income for Q3 2026 was a record $22.7 million ($0.86 per share), compared to $11.3 million ($0.43 per share) in Q3 2025.
• Adjusted earnings per share for Q3 2026 were $0.86, compared to $0.52 in Q3 2025.
• Adjusted EBITDA for Q3 2026 was a record $41.8 million (21.6% of sales), a 29.4% increase ($9.5 million) over Q3 2025.
• Gross profit for Q3 2026 was $64.5 million with a 33.4% margin, up from $50.4 million and a 29.2% margin in Q3 2025.
• Operating income for Q3 2026 was $33.9 million with a 17.5% margin, compared to $21.5 million and a 12.4% margin in Q3 2025.
• SG&A expenses for Q3 2026 were $27.5 million (14.3% of sales), down from $25.9 million (15.0% of sales) in Q3 2025.
• Interest expense for Q3 2026 was $4.3 million, down from $5.8 million in Q3 2025.
• Year-to-date net sales for the first nine months of 2026 were $555.9 million, a 7.8% increase over $515.8 million in the same period of 2025.
• Year-to-date net income for the first nine months of 2026 was $60.0 million ($2.27 per share), compared to $39.3 million ($1.49 per share) in 2025.
• Year-to-date adjusted EBITDA for the first nine months of 2026 was $115.5 million (20.8% of sales), an 18.8% increase over $97.3 million in 2025.
• Net cash provided by operating activities for the first nine months of 2026 was $114.9 million, compared to $91.2 million in 2025.
• Capital expenditures for the first nine months of 2026 were $14.7 million.
• Total debt decreased by $58.0 million during the first nine months of 2026.

Business Segments and Product Lines:

• Q3 2026 sales growth was broad-based across all markets, driven by volume growth and price increases implemented in Q1 2026.
• Agriculture market sales increased $4.7 million in Q3 2026.
• Construction market sales increased $3.5 million in Q3 2026, benefiting from rental equipment sales.
• Industrial market sales increased $3.4 million in Q3 2026, driven by increased HVAC demand.
• Fire suppression market sales increased $3.8 million in Q3 2026 due to higher international sales.
• Municipal market sales increased $2.0 million in Q3 2026.
• OEM market sales increased $1.4 million in Q3 2026.
• Petroleum market sales increased $1.0 million in Q3 2026.
• Repair market sales increased $0.6 million in Q3 2026.
• Year-to-date construction sales increased $14.7 million due to mining demand and rental equipment sales.
• Year-to-date agriculture sales increased $13.3 million due to broad-based channel improvements.
• Year-to-date industrial sales increased $8.6 million due to increased domestic investment.
• Year-to-date fire suppression sales decreased $3.8 million.
• Year-to-date repair sales decreased $0.8 million.
• Incoming orders for the first nine months of 2026 were $562.2 million, a 2.2% increase over the prior year.
• Order backlog was $236.8 million at September 30, 2026, compared to $234.2 million at September 30, 2025.

Risks and Challenges:

• Forward-looking statements are subject to risks including general economic conditions, supply chain conditions, and material availability.
• Risks include retention of key personnel, intellectual property security, and growth through acquisitions.
• Risks include the Company's indebtedness, impairment of intangible assets, and defined benefit pension plan settlement expenses.
• Risks include the LIFO inventory method, family ownership of common equity, and highly competitive markets.
• Risks include availability and costs of raw materials and labor, cybersecurity threats, and artificial intelligence challenges.
• Risks include compliance with import/export laws, U.S. trade policy impacts, environmental compliance costs, and foreign currency fluctuations.
• Risks include conditions in foreign countries, changes in tax rates, and other factors detailed in SEC reports.

Management Commentary and Tone:

• President and CEO Scott A. King expressed pleasure with record net sales, gross margin, and earnings per share.
• Management noted this was the third consecutive quarter of record earnings per share and the second consecutive quarter of record sales.
• Management highlighted that sales growth was broad-based with all markets showing growth year-over-year in Q3.
• Management attributed strong margins to increased volumes driving leverage on labor, overhead, and SG&A expenses.
• Management stated that operating improvements and lower interest expense contributed to record earnings and strong cash generation.
• Management noted that solid operating cash flow enabled a $58.0 million debt reduction while continuing business investment.
• Management described incoming orders and backlog as healthy, citing diverse markets and a strong financial position as a foundation for Q4.

Other Key Points:

• Q3 2025 gross profit included $2.7 million of one-time facility optimization costs, which did not recur in 2026.
• Q3 2025 operating income included $3.0 million of one-time facility optimization costs, which did not recur in 2026.
• The 420 basis point increase in Q3 2026 gross margin was driven by a 190 basis point improvement in labor/overhead, 160 basis points from non-recurring 2025 facility costs, and a 70 basis point reduction in LIFO expense.
• The 240 basis point increase in year-to-date 2026 gross margin included a 100 basis point improvement in material margin (30 basis points from LIFO), 90 basis points from labor/overhead leverage, and 50 basis points from non-recurring facility costs.
• SG&A expenses for the first nine months of 2026 increased due to higher incentive-based payroll, advertising, and freight costs, though the expense ratio improved due to sales leverage.
• Full-year 2026 capital expenditures are planned to be approximately $22.0 million to $24.0 million.
• The Company paid $15.0 million in cash dividends and repurchased $2.6 million of treasury shares during the first nine months of 2026.
• The Company utilizes the simplified LIFO method, where interim calculations are based on management's estimate of the expected year-end inflation index.