Filing update · Gorman-Rupp (GRC)

Gorman-Rupp posts a record quarter, but orders are no longer keeping pace

Gorman-Rupp grew third-quarter 2026 sales 11.8% to $193.3 million and lifted operating margin to 17.5% from 12.4%, while cutting debt by $58.0 million this year. The question for 2027 is demand: first-half orders rose only 1.4% and backlog has slipped since March.

Published
October 24, 2026
Data through
September 30, 2026
Latest filing used
October 23, 2026
Key numbers
Net sales, Q3 2026
$193.3M
Up 11.8% from a year earlier [1]
Operating margin
17.5%
From 12.4% a year earlier [1]
Debt paid down, 2026
$58.0M
Through the first nine months [1]
Orders, first half
+1.4%
$370.8 million, against +10.5% for 2025 as a whole [2] [5]
What changed

Gorman-Rupp, the Ohio pump maker, delivered the best quarter in its history. Sales, margins and cash flow all moved the right way, and the balance sheet is getting lighter by the quarter.

  • Net sales were $193.3 million, up 11.8%, on volume growth and price increases [1].
  • Gross margin widened to 33.4% from 29.2%, and operating margin to 17.5% from 12.4% [1].
  • Net income was a record $22.7 million, or $0.86 a share, against $11.3 million, or $0.43 [1].
  • Cash and debt: nine-month operating cash flow reached $114.9 million and total debt fell $58.0 million [1].
  • The catch: the release gives no orders figure, and the last one, for the first half, showed orders up just 1.4% [2].
The trajectory

Revenue has climbed for four straight quarters, and operating margin has risen in every one of the five shown.

Charts: net sales, operating margin
Net sales
$0M$100M$200M$300MQ3 2025: $173M$173MQ3 '25Q4 2025: $167MQ4 '25Q1 2026: $177MQ1 '26Q2 2026: $186MQ2 '26Q3 2026: $193M$193MQ3 '26
Operating margin
0%10%20%30%Q3 2025: 12.4%12.4%Q3 '25Q4 2025: 14.9% (calculated)Q4 '25Q1 2026: 15.6% (calculated)Q1 '26Q2 2026: 16.3%Q2 '26Q3 2026: 17.5%17.5%Q3 '26

Five quarters as Gorman-Rupp reported them. * Q4 2025 and Q1 2026 operating margins are calculated from reported operating income and net sales. Hover over or tab to a column for its value.

The numbers and their sources
Quarter Net sales Operating margin
Q3 2025 $172.8M [8] 12.4% [8]
Q4 2025 $166.6M [6] 14.9% (calculated)
Q1 2026 $176.6M [4] 15.6% (calculated)
Q2 2026 $186.1M [3] 16.3% [3]
Q3 2026 $193.3M [1] 17.5% [1]

Q4 2025 operating income of $24.9 million is the full-year $95.4 million [6] less the nine-month $70.5 million [8] (calculated). Q1 2026 margin is $27.5 million of operating income on $176.6 million of sales (calculated from [4]).

Margins moved on every line

The improvement runs from gross margin all the way down, which points to price and mix rather than a single cost item.

Chart: Margins, third quarter
Margins, third quarter
0%10%20%30%40%Gross margin: Q3 2025 29.2%, Q3 2026 33.4%33.4%Gross marginAdjusted EBITDA margin: Q3 2025 18.7%, Q3 2026 21.6%21.6%Adjusted EBITDA marginOperating margin: Q3 2025 12.4%, Q3 2026 17.5%17.5%Operating margin
As Gorman-Rupp reported them [1]. Adjusted EBITDA is a non-GAAP measure, as the company defines it.
Show the numbers
ItemQ3 2025Q3 2026
Gross margin29.2%33.4%
Adjusted EBITDA margin18.7%21.6%
Operating margin12.4%17.5%
The order book

Backlog grew through 2025 and into March, then gave some back in the second quarter. With orders growing more slowly than sales, this is the line to watch.

Chart: Backlog of orders
Backlog of orders
$0M$100M$200M$300MSep 2025: $234M$234MSep 2025Dec 2025: $244M$244MDec 2025Mar 2026: $248M$248MMar 2026Jun 2026: $240M$240MJun 2026
As reported [8] [6] [4] [2]. The third-quarter release does not give a backlog figure.
Show the numbers
ItemQuarter end
Sep 2025$234M
Dec 2025$244M
Mar 2026$248M
Jun 2026$240M
A lighter balance sheet

Strong cash flow is going to debt reduction, while cash on hand has still risen.

Chart: Balance sheet, December 2025 to September 2026
Balance sheet, December 2025 to September 2026
$0M$100M$200M$300MLong-term debt: Dec 31, 2025 $284M, Sep 30, 2026 $250M$250MLong-term debtCash: Dec 31, 2025 $35M, Sep 30, 2026 $59M$59MCash
Long-term debt net of current portion, and cash and cash equivalents, as reported [1].
Show the numbers
ItemDec 31, 2025Sep 30, 2026
Long-term debt$284M$250M
Cash$35M$59M
Anomalies worth a closer look

Four things in the filings that complicate a straightforward reading of the record quarter.

Anomalies (4)
Two ways to read it

The same filings support two different conclusions. We set out both; this is not a view on whether to buy or sell the stock.

The two readings

The case that this is a better business than a year ago

On this reading Gorman-Rupp has found pricing power and is turning it into cash and a lighter balance sheet.

  1. 01
    Price and volume together
    Third-quarter sales growth came from "volume growth and price increases" [1], with gross margin up to 33.4% from 29.2% [1].
  2. 02
    Operating leverage is showing
    Operating margin rose in each of the last five quarters, to 17.5% from 12.4% (partly calculated; see the trajectory).
  3. 03
    Cash is paying down debt
    Operating cash flow was $114.9 million in nine months, against $91.2 million a year earlier, and total debt fell $58.0 million [1].
  4. 04
    Lower interest is compounding
    Interest expense fell to $23.4 million in 2025 from $33.6 million [6], and debt has kept falling since.
  5. 05
    A broad customer base
    No single customer exceeded 10% of sales in 2025, 2024 or 2023 [5].

The case that the cycle is nearer its peak than its start

On this reading record results are being drawn from the order book while new demand cools.

  1. 01
    Orders have stalled
    First-half orders rose 1.4% [2] against 10.5% growth in 2025 [5], and backlog has slipped since March [2].
  2. 02
    Some margin is not repeatable
    LIFO cost reductions helped the second quarter [3], and the year-ago quarter carried charges that make the comparison easy [1].
  3. 03
    Leverage is still meaningful
    Gorman-Rupp describes "substantial indebtedness" from a $370 million term loan, a $100 million revolver and $30 million of notes [5], with $188.3 million of maturities in 2029 [5].
  4. 04
    Acquired units carry impairment risk
    The National and Fill-Rite reporting units could face impairment charges if they fail to grow or their long-term projections are revised down [5].
  5. 05
    Tariffs cut both ways
    Tariffs may raise input costs and apply to products sold abroad [7]; 24% of 2025 sales went to customers outside the United States [5].
Hypotheses: short, medium and long term

Testable statements, each with what would support or contradict it and when the next evidence arrives. Thresholds marked "our marker" are ours, not Gorman-Rupp's.

Hypotheses (3)
  1. Short termH1
    Next quarter: Q4 2026 results

    Margins hold above 16% as sales growth slows

    Third-quarter operating margin was 17.5% [1], but the order book stopped growing in the second quarter [2].
    What would support it
    Fourth-quarter operating margin above 16% (our marker) with backlog back above its $244.0 million year-end level [6].
    What would contradict it
    Margin back below 15% (our marker), or backlog below $230 million (our marker).
    Next check: Q4 2026 results, likely early February 2027 (last year's came on February 6 [6]).
  2. Medium termH2
    Next 12 months: through 2027

    Orders reaccelerate enough to replace what is being shipped

    Orders grew 10.5% in 2025 [5] but only 1.4% in the first half of 2026 [2].
    What would support it
    Full-year 2026 orders at or above 2026 net sales, and orders growth back above 5% (our marker) in 2027.
    What would contradict it
    Orders below sales for a second year, or backlog falling for three quarters running.
    Next check: The 2026 annual report (early 2027), which reports full-year orders.
  3. Long termH3
    Three years and more

    Lower debt turns into a structurally higher-margin, lower-risk company

    Debt is falling quickly [1] and interest costs with it [6], ahead of the 2029 maturities [5].
    What would support it
    Operating margin holding above 15% (our marker) through the next downturn, with the 2029 maturities refinanced or largely repaid early.
    What would contradict it
    Margin falling back toward the 12.4% of the third quarter of 2025 [8] at the first slowdown, or impairment charges at National or Fill-Rite.
    Next check: Each annual report.
Risks and contrary evidence
  • Demand. Orders growth slowed sharply in the first half [2]; flat orders would leave sales growth dependent on a shrinking backlog.
  • Tariffs. New or higher tariffs may raise the cost of imported materials and hit products sold abroad, and the company may not be able to offset them through pricing [7].
  • Debt. Gorman-Rupp remains a leveraged company, with $188.3 million of its debt maturing in 2029 [5].
  • Goodwill. The National and Fill-Rite units could face impairment if growth disappoints [5].
  • Legal. Asbestos-related lawsuits have not been material and are not expected to be, according to the company [5].
What would change the view
  • A fourth-quarter backlog below $230 million (our marker), confirming that shipments are consuming the order book.
  • Operating margin falling back toward 15% (our marker) once the LIFO benefit fades.
  • Orders growth recovering above 5% (our marker), which would remove the main concern.
Next check

Fourth-quarter 2026 results and the 2026 annual report. Last year's results came on February 6, 2026 [6], so expect the next update in early February 2027.

How this report was made

Every figure comes from Gorman-Rupp's own SEC filings, listed below; no market prices or third-party data were used. Statements were extracted from the filings with the help of an AI model, each quoted passage was matched against the filing text, and this report was written by Claude (Anthropic) from that evidence. Every figure was checked against the quoted filing text before publication. Figures marked "calculated" are simple arithmetic on reported numbers.

AI-Inflect screen

The deterministic screen's current reading for this company, market data through October 23, 2026. It is separate from the filing analysis above and can change daily; it is not a view on the stock. Open in AI-Inflect

Stage and setup
Stage
Watch
Fundamentals
Strong
Inflection type
Multi factor inflection
Technical setup
Base building
Sector
Industrials materials
Condition matrix · 9 true, 8 false, 0 unknown
  • Revenue growth positiveTrue
  • Revenue growth improvingTrue
  • Revenue growth acceleratingTrue
  • Revenue zero-crossing (loss→growth)False
  • Revenue improved 2 straight qtrsFalse
  • Revenue improved 3 straight qtrsFalse
  • Revenue improved 4 straight qtrsFalse
  • EPS improvingTrue
  • EPS loss→profit crossingFalse
  • Earnings acceleratingTrue
  • Gross margin expandingFalse
  • Operating margin expandingTrue
  • Operating leverageTrue
  • FCF improvingTrue
  • FCF negative→positive crossingFalse
  • FCF margin expandingTrue
  • Cash conversion improvingFalse
Sources

Company filings with the U.S. Securities and Exchange Commission (SEC).

  1. [1]Third-quarter 2026 earnings release · Form 8-K, filed October 23, 2026 · accession 0001193125-26-429546
  2. [2]Quarterly report, quarter ended June 30, 2026 · Form 10-Q, filed July 27, 2026 · accession 0001193125-26-317911
  3. [3]Second-quarter 2026 earnings release · Form 8-K, filed July 24, 2026 · accession 0001193125-26-315278
  4. [4]Quarterly report, quarter ended March 31, 2026 · Form 10-Q, filed April 27, 2026 · accession 0001193125-26-180225
  5. [5]Annual report for 2025 · Form 10-K, filed March 2, 2026 · accession 0001193125-26-084820
  6. [6]Fourth-quarter 2025 earnings release · Form 8-K, filed February 6, 2026 · accession 0001193125-26-040888
  7. [7]Quarterly report, quarter ended September 30, 2025 · Form 10-Q, filed October 27, 2025 · accession 0001193125-25-251006
  8. [8]Third-quarter 2025 earnings release · Form 8-K, filed October 24, 2025 · accession 0001193125-25-249466

This report is general information and education, not a recommendation to buy or sell any security and not personalised financial advice. It follows our editorial principles: every figure traces to the sources above, and figures we calculated are marked as such.

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