Financial Performance - Q3 FY26 - Revenue decreased by 10.2% to $2.6 billion, primarily due to a slowed procurement and funding environment, including the government shutdown[47] - Revenue excluding billable expenses decreased by 6.7% to $1.8 billion[13, 24] - Adjusted EBITDA decreased by 14.2% to $285 million, with adjusted EBITDA margins at 10.9%, a decrease of 50 bps[13, 24] - Adjusted Diluted EPS increased by 14.2% to $1.77, driven by profitability and tax benefits[13, 14] - Free Cash Flow increased by 85.1% to $248 million due to higher collections, lower payables, and lower tax payments[13, 47] Backlog and Book-to-Bill - Backlog increased by 2% year-over-year to $38 billion[14] - Quarterly book-to-bill was 0.3x, and LTM book-to-bill was 1.1x[14] Capital Deployment - $125 million was deployed in share repurchases during the third quarter, representing 1.1% of outstanding shares[16] - The board approved a quarterly dividend of $0.59 per share, a 7% increase[16] - A $400 million capital commitment was made for a partnership with Andreessen Horowitz (a16z)[16] FY26 Financial Outlook - Revenue is projected to be $11.3 - $11.4 billion, representing a decrease of 5.0 - 6.0%[18] - Adjusted EBITDA is expected to be $1,195 - $1,215 million, with adjusted EBITDA margin on revenue in the mid 10% range[18] - Adjusted Diluted EPS is projected to be $5.95 - $6.15[18] - Free Cash Flow is expected to be $825 - $900 million[18]

Core Insights - The Gorman-Rupp Company reported a net sales increase of 2.8% to $172.8 million for Q3 2025 compared to Q3 2024, driven by growth in various markets, particularly industrial and municipal [2][6][12] - The company undertook facility optimization, reducing the number of National Pump Company operating facilities from six to three, which is expected to yield annualized savings of $2.0 to $2.5 million [1][21] - Net income for Q3 2025 was $11.3 million, or $0.43 per share, down from $12.9 million, or $0.49 per share in Q3 2024, with adjusted earnings per share increasing to $0.52 [6][10][18] Financial Performance - Gross profit for Q3 2025 was $50.4 million, resulting in a gross margin of 29.2%, down from 31.3% in Q3 2024, impacted by facility optimization costs and increased material costs [4][7] - Selling, general and administrative expenses were $25.9 million, representing 15.0% of net sales, slightly improved from 15.3% in Q3 2024 [5][14] - Operating income for Q3 2025 was $21.5 million, with an operating margin of 12.4%, compared to $23.9 million and 14.2% in Q3 2024 [5][7] Market Dynamics - Sales growth was noted across most markets, with significant increases in the industrial market ($5.3 million) and municipal market ($2.1 million), while the construction market saw a decline of $4.6 million [3][12] - Incoming orders for Q3 2025 reached $184.5 million, a 19.2% increase compared to the same quarter last year, indicating strong demand across various sectors [6][19] Year-to-Date Highlights - For the first nine months of 2025, net sales were $515.8 million, up 3.8% from $497.0 million in the same period of 2024 [11] - Year-to-date net income was $39.3 million, or $1.49 per share, compared to $29.1 million, or $1.11 per share in the first nine months of 2024 [18] - The company's backlog of orders increased to $234.2 million as of September 30, 2025, compared to $206.0 million at the end of 2024 [19]