The Gorman-Rupp Company Common Shares 17th Annual Midwest IDEAS Conference

Thank you. Good afternoon, everyone. Again, my name's Scott. I'm President and CEO of the company. I've been with Gorman-Rupp for 21 years, President and CEO since beginning of 2022. I do have Ron Stoops with me. Ron, as we've announced, has been appointed to the role of CFO starting on October 1st. Our current CFO, who is here with us at the conference today, will be retiring on October 1st. Jim Curry's just walking in at the back of the room, so certainly appreciate all of Jim's contributions over the years. We'll make some forward-looking statements today. Take those into account as you please evaluate what we're saying. Gorman-Rupp is a pump company. It's all that we do, and we're known quite well for that in the industry. We make mission critical equipment that is in non-discretionary applications and markets.

Our customers depend on this equipment every day to keep their operations and installations moving. We're in highly diverse end markets, so we make numerous different product types to move the different types of fluids that are necessary to be moved in those. And we make those diverse products can be applied across numerous markets, which really helps us in reducing cyclicality of some of those markets. We do have multiple growth levers that are driving the business at this point. Certainly, infrastructure investment has been a good tailwind for us in recent years. We're very well known in the water and wastewater markets that we serve. We've been gaining market share as we continue to treat customers extremely well. Gorman-Rupp has one of the best cultures in the pump industry. All we ask our employees to do is take care of customers.

The customers are the ones with the money, and our employees know that when the customers share the money with us, that we share it with our employees through a great profit-sharing program. We have robust new product development pipelines that are helping customers solve problems. We're further growing our businesses internationally. We've been making disciplined acquisitions and plan to continue to do so. And we're benefiting from some applications where our products are used in data centers as we move forward. That's great. We do have some structural advantages, high-quality products, the culture I mentioned. We really lead engineering for the industry and some of the standard setting activities that go on through the Pump Industry Manufacturers Association called the Hydraulic Institute. One of our engineers actually leads technical affairs for HI, and numerous of our engineers participate in HI standards setting committees.

Our distribution network is really the best within the industry. They are trained by us within the factories, and we protect the territories and markets that we have assigned to them and then hold them accountable to performing well in those territories. We have an extremely U.S.-centric supply chain that was useful to us before COVID, was useful to us during COVID, during inflationary periods, during tariffs, and continues to be so today, and will continue to be so in the future. We have a well-recognized group of brands within the company. They are across the bottom of the page that you see on screen now. Every one of those has a number one niche within a profitable portion of the pump industry. Our financial performance has been attractive in recent years. We have grown margins. We generate very consistent operating cash flows.

We have been very disciplined in our capital allocation and have a solid record of returning capital to shareholders with 53 years of increased dividends to shareholders under our belt. As we reinvest in the business, which is our first priority, we have been doing a good job of expanding capacities and allowing margins to expand in our existing facilities by leveraging fixed growth or fixed costs, I am sorry. Continuing to reduce debt and with our leverage now below 2x EBITDA, we are turning our mindset back toward evaluating acquisitions in the pump industry. The last five years have been pretty good for Gorman-Rupp. In the third column, we are showing you our performance. We have had an average of 14.4% compound annual growth during those five years. It has continued to grow during 2026.

Of that 14.4%, 5.7% of that came from the acquisition of Fill-Rite, which we bought in May of 2022 from The Tuthill Corporation. It has been an excellent acquisition. Legacy Gorman-Rupp has done a good job of growing organically during that period of time at an average of 8.6%. As a result of that solid organic growth, we have had a good success in further expanding our margins. First, Fill-Rite margins were higher than legacy Gorman-Rupp margins. Then as legacy Gorman-Rupp expanded its unitary volumes, we did a good job of leveraging our fixed costs and expanded margins well over 500 basis points over that five-year period of time. Margins in 2026 have been at record levels, and structurally, we think there is not anything unique so far in 2026 that would suggest those are not sustainable.

As we continue to grow unitary volumes, we think there is a bit more opportunity to continue to grow. In addition, we have been able to grow our sales while growing our inventory at a slower pace than sales, so we have done a better job of managing our working capital as we have grown. There are some favorable external trends that are quite helpful to the company as we look forward about our future opportunities. Water and wastewater infrastructure in America and around the world is aging. We are very well-known in water and wastewater applications, and that will be a great tailwind for us as we continue to move forward. Making money off of catastrophic weather events is not anything that we have as part of our strategic plan or that we want to have happen. But we are uniquely suited to make products that can move 1 million gallons per minute of stormwater.

As a municipality is interested in putting up some protections against, whether it be rising seawaters or other flooding events, we are pretty uniquely suited to that. We make pumps that help cool computers. That has been a very nice tailwind for us as data center construction is occurring. Supply chains are certainly in conditions of uncertainty within the industry. Our more U.S.-centric supply chain is less uncertain than what many of our competitors are navigating. It was that way, as I mentioned before, COVID. It continues to be so today. Whatever the next curveball that gets thrown at us from a supply chain standpoint, we think our supply chain will outperform.

One other, I guess it has been a headwind in recent terms, we believe they are starting to bottom and will turn into a bit of a tailwind now, at least on a comparable basis, is that the agriculture and construction markets have been relatively weak. It appears now that irrigation is starting to pick up and the rental activity, the pumps that we sell to rental firms that rent equipment to contractors, is starting to pick up as well. So that should turn from what has been a headwind into a tailwind for us. It is hard to talk about Gorman-Rupp without talking about a little bit of its heritage, which is a great American entrepreneurial story. In 1933, J.C. Gorman and Herb Rupp were both unemployed. They had worked at another pump company in our hometown of Mansfield, Ohio, that went bust at the height of the Great Depression.

They met on a street corner in downtown Mansfield, and Mr. Gorman said, "Gosh, Herb, what are you going to do?" Herb said, "Well, I have this idea about how to make a pump prime itself better." J.C. Gorman said, "Gosh, Herb, if you can make it, I can sell it." They borrowed $1,500 from a local family in Mansfield that was making trolley car parts at the time, and trolley car business was still pretty solid, so they had some money to lend. That is the only money that has ever been put into The Gorman-Rupp Company today. So we are today over $2 billion in market Cap off of that original $1,500 investment, which would be very hard to duplicate today, as you might imagine. The rest of the page talks about a series of acquisitions.

I will call out in May of 2022, we bought Fill-Rite from the Tuthill Corporation, which has been a wonderful acquisition and really changed the growth profile of the company and allowed us to expand margins beyond what legacy Gorman-Rupp was doing. I should also note that in 2025, we reached 53 consecutive years of increased dividend payments to shareholders, which that is longer than I have been alive. So just to put it into context, pretty cool. You use our pumps every day. You have used them today, you just do not know it. If you flew on an airplane in the last few days, the fuel went through that. The HVAC system in this hotel could be supplemented with pumps circulating HVAC water. If you ate crops, we may have irrigated the crops. If you took a shower or flushed the toilet, your wastewater may have been conveyed with our products.

If you're drinking potable water, that may have been pressurized by our products. There are numerous different applications that you touch every day. You just don't know that you touch them, and they're ours. The pump industry is pretty sizable. We think it's about an $80 billion industry. There are hundreds of pump companies in the world, so it's very fragmented. It started out that way as a result of just exactly the way Mr. Gorman and Mr. Rupp got into business. Somebody had a good idea about how they might be able to help move fluids and solve a customer's problem better, started a pump company. Many of them are still family-held. Some of them have been consolidated into larger competition.

Despite the fact that we're only about maybe a little less than 1% of the world's pump market, we're probably one of the 20 largest on a consolidated basis out there, and our market share has been growing, which is great. That competition is really diverse. There are lots of opportunities within that competition for us to think of acquisition targets. That doesn't mean they're all available or immediately available when we might want them. That also means that there are some that we would have no interest in and that wouldn't fit our criteria. Having a mature industry means generally pricing is pretty stable. As material costs have increased, we've had good luck at being able to pass that into the market. Our customers are very loyal. Gorman-Rupp does a really good job of taking care of customers.