The Gorman-Rupp Company (GRC) | The Buildout — AI Infrastructure
The Verdict
The Gorman-Rupp Company makes pumps and pump systems that move liquids — water, wastewater, fire suppression, dewatering, industrial, petroleum, agricultural, HVAC and military applications. It sells them to original-equipment builders, distributors and MRO channels, municipal water and wastewater authorities, and industrial and energy end users. The AI buildout reaches it only indirectly: data centers need fire-suppression pumps, cooling-tower circulation pumps and water-supply pumps, and management attributes part of one end market's 2025 growth to data center demand. The company is not a bottleneck — the criticality read in the financial data concludes that data center cooling pumps are widely available from numerous other suppliers with immediate substitution.
| Market Cap | — |
| Revenue (TTM) | $702M |
| Revenue Growth | +4.2% |
| EBITDA Margin (TTM) | 18.8% |
| Net Debt | $231M |
| Earnings Beats | 4 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Diversified revenue base: no customer and no foreign country exceeded 10% of net sales in 2025, 2024 or 2023 (10-K).
- Adjusted EBITDA margin reached 20.5% of sales in Q2 2026, up from 18.1% in Q1 2025 on the company's own adjusted basis.
- Backlog was $247.9M at March 31, 2026, up 13.8% year over year, and management expects substantially all of it to convert within one year.
- 306 consecutive quarterly dividends; the latest was declared at $0.19 per share, unchanged.
- Interest expense fell to $23.4M in FY2025 from $33.6M in FY2024, and roughly $15M per quarter went to debt repayment in Q1 2026.
What We’re Watching
- Revenue growth decelerated to +3.9% in Q2 2026 from +7.7% in Q1 2026, and the company discloses no orders or book-to-bill to explain the swing.
- Fire suppression grew $6.6M in FY2025 partly on data center demand, then fell 16.8% year over year in Q1 2026.
- The margin driver is undocumented: Q1 2026's gross-margin gain came partly from favorable product mix, which can reverse.
- CFO transition effective October 1, 2026 — Ronald F. Stoops succeeds James C. Kerr; watch for any change in guidance or disclosure posture.
Sales, net income and adjusted EBITDA all set records in Q2 2026, and margins are higher than a year ago, so the near-term picture is strengthening at the headline level. What the evidence cannot show is whether that is durable: there is no earnings call, no guidance, no order rate, and no Q2 explanation for the margin, and the fire end market carrying the only management-acknowledged data center link fell 16.8% year over year in Q1 2026. The open question is whether the margin is structural or mix-driven — and whether the data center demand its inferred neighbors describe converts into Gorman-Rupp revenue at all.
Earnings Beat
Net sales were a record $186.1 million in Q2 2026, up 3.9% year over year. Gross margin was 34.2%, up from 31.3% a year earlier. Net income was also a record at $19.4 million, and diluted EPS rose to $0.74 from $0.60.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $186M | $177M | $179M | +4.0% |
| Gross margin | 34.2% | 30.7% | 31.3% | +290bps |
| EBITDA | $37M | $34M | $34M | +10.3% |
| EPS | $0.73 | $0.68 | $0.60 | +22.3% |
| Backlog (Mar 31, 2026) | $247.9M | $244.0M | $217.8M | +13.8% |
Management tone: No earnings call on record for the latest period. Disclosure behaviour is what can be observed: the record quarter and the CFO handoff were both filed the same day in separate 8-Ks, under Items 2.02 and 5.02. The Q2 2026 materials carry no guidance, no backlog commentary and no end-market colour, and the adjusted-EBITDA delta is truncated mid-sentence.
Management Guidance
No revenue, margin or EPS guidance was issued for FY2026 or Q3 2026. The only forward figures on record are FY2026 capital expenditures, stated as approximately $20.0-$22.0 million in the FY2025 press release and approximately $22.0-$24.0 million in the Q1 2026 10-Q, expected to be financed through cash from operations — the two company statements disagree. The company also guides a FY2026 effective tax rate of between 22.0% and 23.0%.
Trajectory
Revenue growth has been uneven: +7.7% in Q1 2026, then +3.9% in Q2, against +3.4% for FY2025 and +2.4% in Q4 2025. Margins have moved more consistently in one direction. Gross margin went from 31.3% in Q2 2025 to 34.2% in Q2 2026, and EBITDA margin on the operating-income-plus-D&A basis from 18.9% to 20.1% over the same quarters. The company attributed Q1 2026's gross-margin gain to 100 basis points of labour-and-overhead leverage on higher sales and 80 basis points of cost-of-material improvement from favourable product mix; the Q2 release is truncated, so its driver is not documented. Backlog at March 31, 2026 was up 13.8% year over year, which is faster than revenue — suggesting orders have been outrunning shipments.
The Model
The model projects FY+1 revenue of $720M with EBITDA of $143M, a 19.8% margin, and FY+2 revenue of $760.0M with EBITDA of $154M, a 20.2% margin. The FY+1 figure sits slightly above trailing-twelve-month revenue of $702.1M; the FY+2 figure is about 5.6% above FY+1, with the margin widening about 40 basis points. What anchors the near term in the evidence is a backlog that management expects to convert substantially within one year, plus an adjusted EBITDA margin already running above 20%. What drives FY+2 beyond that is not disclosed by the company.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $682M | $720M | $760M |
| YoY Growth | — | +5.5% | +5.6% |
| EBITDA | $123M | $143M | $154M |
| EBITDA Margin | 18.0% | 19.8% | 20.2% |
Projections are the median of 5 independent model runs. The model’s revenue sits 1.4% above analyst consensus.
No revenue, margin or EPS guidance was issued for FY2026 or Q3 2026. The only forward figures on record are FY2026 capital expenditures, stated as approximately $20.0-$22.0 million in the FY2025 press release and approximately $22.0-$24.0 million in the Q1 2026 10-Q, expected to be financed through cash from operations — the two company statements disagree. The company also guides a FY2026 effective tax rate of between 22.0% and 23.0%.
What Could Go Right — and Wrong
- Backlog conversion lifts revenue growth back above the 7.7% reported in Q1 2026.
- Gross margin holds near the 34.2% reported in Q2 2026 as the $2.0-$2.5M of annualized NPC facility savings flow through.
- Management quantifies data center or semiconductor end-market revenue for the first time.
- Debt keeps falling and interest expense keeps declining, adding to net income independently of operations.
- Orders keep outrunning shipments, extending year-over-year backlog growth beyond 13.8%.
- Revenue growth stays in the low single digits while the demand its inferred neighbors describe grows far faster.
- The margin gain proves mix-driven and reverses; Q1 2026's improvement came partly from favourable product mix.
- A limited number of motor and engine suppliers constrains volume, as the 10-K risk factor warns.
- Input-cost inflation pressures the margin — inferred neighbors cite LIFO expense and tariff mitigation.
- Fire stays volatile: it fell 16.8% year over year in Q1 2026 after growing $6.6M in FY2025.
Looking Ahead
Over the next twelve months the dated items are governance and shareholder-return events: the September 10, 2026 dividend payment and the October 1, 2026 CFO transition. The company gives no revenue, margin or EPS guidance, so there is no guided milestone to track. The question the evidence leaves open is whether any future disclosure quantifies data center or semiconductor exposure, or explains what drove the margin to 20.5% of sales.
- September 10, 2026Quarterly dividend payment — $0.19 per share; the 306th consecutive quarterly dividend.
- October 1, 2026New CFO takes over — Ronald F. Stoops succeeds James C. Kerr; watch disclosure posture.
- Q3 2026Q3 2026 results — Tests whether the margin holds and whether disclosure changes.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $660M | $682M | $702M | +3.4% |
| Gross Margin | 30.5% | 29.8% | 30.6% | 73bps |
| EBITDA | $119M | $123M | $132M | +3.1% |
| EBITDA Margin | 18.1% | 18.0% | 18.8% | 6bps |
| Net Income | $40M | $53M | $62M | +31.9% |
| Free Cash Flow | $55M | $89M | $108M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)30.6%
- EBITDA Margin (TTM)18.8%
- Net Margin (TTM)8.9%
- ROIC12.2%
- FCF Conversion82.1%
- SBC / Revenue0.7%
The Company
The Gorman-Rupp Company makes pumps and pump systems for moving liquids, founded in 1933 and headquartered in Mansfield, Ohio. The 10-K lists twelve pump families, including self-priming and standard centrifugal pumps, magnetic drive centrifugal pumps, axial and mixed-flow pumps, vertical turbine line-shaft pumps, submersible pumps, high-pressure booster pumps, rotary gear and vein pumps, diaphragm pumps, bellows pumps and oscillating pumps. They are sold into water, wastewater, construction, dewatering, industrial, petroleum, original-equipment, agriculture, fire suppression, HVAC, military and other liquid-handling uses. It is a mechanical-engineering portfolio rather than a single-product bet.
The company operates as one business segment — 'the manufacture and sale of pumps and pump systems' — so there is no segment-level revenue or margin breakout. The 10-K property table lists 14 manufacturing and R&D sites totalling roughly 2.2 million square feet: ten in the United States, plus Ireland, the Netherlands, Canada, South Africa and Belgium. Plants are tagged to end markets; fire is concentrated at Toccoa, Georgia, Olive Branch, Mississippi and County Westmeath, Ireland. The 10-K states that no customer and no foreign country exceeded 10% of net sales in 2025, 2024 or 2023. International sales were about 24% of total net sales in Q1 2026, down from 26% a year earlier.
Business Segments
Competitive Landscape
The competitive picture here comes from a model-generated relationship map, not from company statements. That map lists Flowserve, Xylem, Grundfos, ITT, IDEX and PNR as competitors, all flagged as inferred with no documented quotes. Xylem and Grundfos are specifically flagged in that map as competing in data center cooling, where the demand narrative is strongest. The criticality read in the financial data concludes that data center cooling pumps are widely available from numerous other suppliers with immediate substitution. No direct pump-competitor transcripts appear in the neighbor set, so the evidence offers no read on share shifts.
- Flowserve (FLS)Named in the inferred supply-chain map for industrial pumps and flow control; not discussed elsewhere.
- Xylem (XYL)Listed in the inferred map for industrial pumps and explicitly flagged there for data center cooling.
- GrundfosListed in the inferred map for HVAC circulation and flagged there for data center cooling.
- ITTNamed in the inferred map for municipal, industrial and HVAC pumps; not discussed elsewhere.
- IDEXNamed in the inferred map for niche pump markets; not discussed elsewhere.
Supply Chain
Gorman-Rupp buys castings, motors, seals and electronic components and machines and assembles pumps at its own plants, selling through distributors, MRO channels and original-equipment builders. No neighbour in the evidence names Gorman-Rupp, so these links are inferred.