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Financial Performance - Net sales for Q3 2025 were $581.7 million, a 9% increase compared to Q3 2024, while year-to-date (YTD) sales reached $1.6 billion, up 6% from the previous year[95] - Gross profit for Q3 2025 was $208.7 million, representing a gross profit margin of 35.9%, compared to 35.7% in Q3 2024[104][105] - Diluted earnings per share for Q3 2025 decreased to $0.37, down $0.80 from Q3 2024, primarily due to a pension settlement loss of $41.7 million net of tax[95] - Net income for Q3 2025 was $17.2 million, a decrease from $54.9 million in Q3 2024, with diluted earnings per share dropping from $1.17 to $0.37[121] Sales Growth - Water Systems net sales increased by 11% in Q3 2025 and 7% YTD, driven by acquisitions and favorable volumes[98] - Energy Systems net sales rose 15% in Q3 2025 and 9% YTD, primarily due to price realization and favorable volumes[101] - Distribution segment net sales increased by 3% in Q3 2025 and 2% YTD, attributed to higher volumes and price realization[103] Operating Income and Expenses - Operating income for Q3 2025 was $85.1 million, an increase of 16% compared to Q3 2024, with a consolidated operating income margin of 14.6%[108] - SG&A expenses were $123.5 million in Q3 2025, with an SG&A ratio of 21.2%, down from 21.8% in Q3 2024[106] Acquisitions - The Company completed acquisitions of Barnes de Colombia S.A. and PumpEng Pty Ltd, contributing $37.2 million in incremental net sales in the first nine months of 2025[93] Cash Flow and Investments - Net cash provided by operating activities was $134.7 million for the first nine months of 2025, down from $151.1 million in the same period of 2024[131] - Net cash used in investing activities increased significantly to $137.1 million in the first nine months of 2025, compared to $29.3 million in 2024, primarily due to acquisitions[132] Debt and Interest - Interest expense increased to $3.5 million in Q3 2025 from $1.6 million in Q3 2024, driven by higher outstanding debt[115] - As of September 30, 2025, the company had a $350.0 million revolving credit facility with $277.3 million available for borrowing[123] - The company maintains a remaining borrowing capacity of $200.0 million under the Prudential Agreement as of September 30, 2025[124] Tax and Foreign Exchange - The effective tax rate rose to 26.9% in Q3 2025 from 23.6% in Q3 2024, influenced by foreign earnings and less favorable discrete events[120] - Foreign exchange transactions resulted in an expense of $2.7 million in Q3 2025, compared to a gain of $0.1 million in Q3 2024, mainly due to losses from the Argentine Peso and Turkish Lira[118] Pension and Other Charges - The company reported a pension settlement charge of $55.3 million in Q3 2025 related to the Franklin Electric Co., Inc. Pension Plan[117] - The Company anticipates ongoing uncertainty regarding the impact of tariffs and global trade policies on its consolidated results[94] Cash Holdings - Cash and cash equivalents held in foreign jurisdictions amounted to $62.7 million, intended for funding foreign operations[127]

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Core Insights - Franklin Electric Co., Inc. reported strong financial performance for Q3 2025, with revenue and earnings per share exceeding estimates [1][2][3] Financial Performance - The company achieved a revenue of approximately $581.7 million, surpassing the estimated $563.2 million, reflecting a 3.32% increase over the Zacks Consensus Estimate and a year-over-year increase from $531.44 million [2] - Earnings per share (EPS) for the quarter was $1.3, exceeding the Zacks Consensus Estimate of $1.27 and improving from $1.17 in the same quarter last year, resulting in an earnings surprise of +2.36% [3][6] Financial Health - Franklin Electric's price-to-earnings (P/E) ratio is approximately 30.77, indicating strong investor confidence in its earnings potential [4][6] - The company has a low debt-to-equity ratio of approximately 0.20, highlighting its financial stability [4][6] - A current ratio of about 2.54 suggests a strong ability to cover short-term liabilities with short-term assets [5] - The enterprise value to operating cash flow ratio is around 17.98, demonstrating the company's capability to cover its enterprise value with operating cash flow [5]

Core Insights - Franklin Electric (FELE) is currently rated as a 2 (Buy) by Zacks Rank, while Schneider Electric SE (SBGSY) is rated as a 5 (Strong Sell), indicating a stronger earnings outlook for FELE compared to SBGSY [3] - Value investors utilize various valuation metrics to assess whether a company is undervalued, including P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] Valuation Metrics - FELE has a forward P/E ratio of 23.70, while SBGSY has a forward P/E of 29.55, suggesting that FELE may be more attractively priced [5] - The PEG ratio for FELE is 1.97, compared to SBGSY's PEG ratio of 2.05, indicating that FELE has a better expected EPS growth rate relative to its valuation [5] - FELE's P/B ratio stands at 3.46, while SBGSY's P/B ratio is 5.13, further supporting the notion that FELE is undervalued compared to SBGSY [6] - Based on these metrics, FELE holds a Value grade of B, whereas SBGSY has a Value grade of D, making FELE a more appealing option for value investors [6]

Core Insights - Franklin Electric reported quarterly earnings of $1.3 per share, exceeding the Zacks Consensus Estimate of $1.27 per share, and showing an increase from $1.17 per share a year ago, resulting in an earnings surprise of +2.36% [1] - The company achieved revenues of $581.71 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.32% and up from $531.44 million year-over-year [2] Earnings Performance - Over the last four quarters, Franklin Electric has surpassed consensus EPS estimates three times [2] - The company had a favorable trend in estimate revisions ahead of the earnings release, currently holding a Zacks Rank 2 (Buy), indicating expected outperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.90 on revenues of $510 million, and for the current fiscal year, it is $4.16 on revenues of $2.12 billion [7] - The outlook for the Manufacturing - Electronics industry, where Franklin Electric operates, is positive, ranking in the top 26% of over 250 Zacks industries, suggesting potential for strong performance [8] Market Comparison - Franklin Electric shares have increased by about 1.1% since the beginning of the year, contrasting with the S&P 500's gain of 16.9% [3] - Emerson Electric, a competitor in the same industry, is expected to report quarterly earnings of $1.62 per share, reflecting a year-over-year change of +9.5% [9]

Financial Data and Key Metrics Changes - Consolidated sales for Q3 2025 were $582 million, up over 9% year over year, driven by strong organic contribution and pricing actions [6][10] - Adjusted fully diluted earnings per share increased to $1.30 for Q3 2025, an 11% rise compared to $1.17 in Q3 2024 [10][11] - Gross profit was $208.7 million, up from $189.7 million in the prior year, with gross profit as a percentage of net sales at 35.9%, an increase of 20 basis points [10][11] - Operating income rose to $85.1 million, a 16% increase from $73.5 million in the prior year, with an operating income margin of 14.6%, up from 13.8% [12][13] Business Segment Data and Key Metrics Changes - Water Systems sales increased by 11% year over year, driven by price, volume, and acquisitions, with significant growth in Europe, the U.S., and Canada [7][13] - Energy Systems sales were up nearly 15% year over year, with strong growth in the U.S., Europe, and India, despite expected moderation in Q3 due to seasonal factors [8][15] - Distribution segment sales increased by 3.4%, marking the strongest pricing performance in over two years, with operating income rising by 34% [9][14] Market Data and Key Metrics Changes - U.S. and Canadian Water Systems sales were up 9% compared to Q3 2024, with groundwater pumping equipment sales remaining flat [13] - Energy Systems sales outside the U.S. and Canada increased by 26%, led by growth in India and Europe [15] - The overall market conditions remain variable, with residential construction activity subdued, but the company continues to perform well relative to the market [9] Company Strategy and Development Direction - The company is focused on growth acceleration, resilient margins, strategic investments, and top-tier talent, with ongoing innovation and capacity expansion projects [18][21] - New product launches in the pressure-boosting market are expected to drive growth, with a total addressable market in the high hundreds of millions of dollars [20][41] - The company is expanding its global footprint with a new factory in Izmir, Turkey, expected to start production in Q1 2026 [21][92] Management's Comments on Operating Environment and Future Outlook - Management anticipates a subdued market in the U.S. and Canada for 2026, but expects volume growth driven by innovation and strong channel partnerships [27][30] - The company is optimistic about growth opportunities outside the U.S., particularly in Latin America and emerging markets [30][53] - Management highlighted the importance of customer intimacy and the ability to adapt to market conditions as key factors for future success [66] Other Important Information - The company announced a quarterly cash dividend of $0.265, payable on November 20 to shareholders of record on November 6 [17] - The effective tax rate for the quarter was 27%, up from 24% in the prior year, influenced by increased foreign earnings [16] Q&A Session Summary Question: Outlook for end markets in 2026 - Management expects a subdued market in the U.S. and Canada but anticipates volume growth due to innovation and strong channel relationships [27][30] Question: Impact of tariffs and geographic mix on Energy Systems margins - The majority of margin impact is attributed to tariffs, with more than two-thirds of the variance year over year due to this factor [45] Question: Opportunities in the pressure boosting market - The total addressable market is in the high hundreds of millions, with growth driven by urbanization and the need for pressure boosting in various sectors [41] Question: Backlog growth in Energy Systems - The backlog is up year over year, with favorable growth prospects for 2026 driven by ongoing investments in fuel and infrastructure [52][53] Question: Performance of groundwater market - The groundwater market in the U.S. is expected to remain flat, but the company anticipates stable volume growth due to a high replacement rate [56] Question: Factory expansion in Turkey - Production is expected to start in Q1 2026, with normalized margins anticipated in the latter half of the year [91][92]

Financial Data and Key Metrics Changes - Consolidated sales for Q3 2025 were $582 million, up over 9% year-over-year, driven by strong organic contribution and pricing actions [6][10][11] - Fully diluted earnings per share were $0.37 for Q3 2025, down from $1.17 in Q3 2024, primarily due to the termination of the U.S. pension plan impacting EPS by approximately $0.93 [10][11] - Adjusted fully diluted earnings per share increased by 11% to $1.30 for Q3 2025 compared to $1.17 in Q3 2024 [10][11] - Gross profit was $208.7 million, up from $189.7 million year-over-year, with gross profit as a percentage of net sales at 35.9%, an increase of 20 basis points [10][11][12] Business Segment Data and Key Metrics Changes - Water systems sales increased by 11% year-over-year, driven by price, volume, and acquisitions, with significant growth in Europe, the U.S., and Canada [7][14] - Energy systems sales rose nearly 15% year-over-year, with strong growth in the U.S., Europe, and India, despite expected moderation in Q3 due to seasonal factors [8][15] - Distribution segment sales increased by 3.4%, marking the strongest pricing performance in over two years, with operating income up 34% year-over-year [9][15][86] Market Data and Key Metrics Changes - The U.S. and Canadian markets for water systems performed well despite softer housing starts, indicating resilience and market share capture [7][14] - Internationally, energy systems sales outside the U.S. and Canada increased by 26%, led by growth in India and Europe [15] - The groundwater market in the U.S. was relatively flat, with expectations for low single-digit growth next year [56] Company Strategy and Development Direction - The company is focused on growth acceleration, resilient margins, strategic investments, and top-tier talent as part of its value creation framework [18] - Innovation is central to the growth strategy, with new product launches aimed at enhancing efficiency and reliability in the pressure-boosting market [19][20] - A new factory in Izmir, Turkey, is set to start production in Q1 2026, aimed at expanding capabilities in Eastern Europe and the Middle East [21][92] Management's Comments on Operating Environment and Future Outlook - Management expects a subdued market in the U.S. and Canada for 2026, with volume growth anticipated despite challenging macro conditions [27][30] - The company is optimistic about growth opportunities outside the U.S., particularly in Latin America and emerging markets [28][53] - Management highlighted the importance of customer intimacy and the ability to adapt to market needs as key drivers for future success [66] Other Important Information - The company announced a quarterly cash dividend of $0.265, payable on November 20, 2025 [17] - The effective tax rate for Q3 was 27%, up from 24% in the prior year, influenced by increased foreign earnings [16] Q&A Session Summary Question: Outlook for end markets in 2026 - Management anticipates a flattish market in the U.S. and Canada but expects volume growth driven by innovation and strong channel partnerships [27][30] Question: Impact of tariffs and geographic mix on energy systems margins - The majority of margin impacts are attributed to tariffs, with geographic mix contributing to a lesser extent [45] Question: Backlog growth in energy systems - Backlog growth is favorable, with positive trends expected in both U.S. and international markets [52][53] Question: Performance of groundwater market - The groundwater market is expected to remain flat, with low single-digit growth anticipated due to high replacement rates [56] Question: Distribution business margin improvements - Margin improvements are driven by better cost management, strategic pricing, and operational efficiencies [84][88] Question: Factory expansion in Turkey - The new factory is expected to start production in Q1 2026, with normalized margins anticipated in the latter half of the year [91][92]

Financial Data and Key Metrics Changes - Consolidated sales for Q3 2025 were $582 million, up over 9% year over year, driven by strong organic contribution and pricing actions [5][9] - Adjusted fully diluted earnings per share increased by 11% to $1.30 for Q3 2025 compared to $1.17 for Q3 2024 [9] - Gross profit was $208.7 million, up from $189.7 million in the prior year, with gross profit as a percentage of net sales at 35.9%, an increase of 20 basis points [9][10] - Operating income rose to $85.1 million, a 16% increase from $73.5 million in the prior year, with an operating income margin of 14.6%, up from 13.8% [10][11] Business Segment Data and Key Metrics Changes - Water Systems sales increased by 11% year over year, with strong performance in Europe, the U.S., and Canada, despite softer housing starts [6][11] - Energy Systems sales were up nearly 15% year over year, with significant growth in the U.S., Europe, and India, and a healthy order intake [7][14] - Distribution segment sales increased by 3.4%, marking the strongest pricing performance in over two years, driven by both price and volume [8][13] Market Data and Key Metrics Changes - U.S. and Canadian Water Systems sales were up 9%, with large dewatering equipment sales increasing by 38% [11][12] - Energy Systems sales in the U.S. and Canada increased by 11%, while sales outside these regions rose by 26% [14] - The groundwater market in the U.S. was relatively flat, but the company expects low single-digit growth due to high replacement rates [44] Company Strategy and Development Direction - The company is focused on growth acceleration, resilient margins, strategic investments, and top-tier talent, with ongoing innovation and capacity expansion [17][19] - New product launches in the pressure-boosting market are expected to drive growth, with a total addressable market in the high hundreds of millions of dollars [35] - The company is expanding its global footprint with a new factory in Izmir, Turkey, to enhance capabilities in Eastern Europe and the Middle East [19][68] Management's Comments on Operating Environment and Future Outlook - Management anticipates a subdued market in the U.S. and Canada for 2026, but expects volume growth driven by innovation and strong channel relationships [24][26] - The company is optimistic about growth opportunities outside the U.S., particularly in Latin America and emerging markets [25][42] - Management highlighted the importance of maintaining strong cost discipline and strategic pricing to navigate macroeconomic challenges [4][10] Other Important Information - The company announced a quarterly cash dividend of $0.265, payable on November 20 [16] - The effective tax rate for the quarter was 27%, up from 24% in the prior year, influenced by increased foreign earnings [15] Q&A Session Summary Question: Outlook for end markets moving into next year - Management expects a flattish market in the U.S. and Canada but anticipates volume growth due to strong channel relationships and new product introductions [24][26] Question: Energy Systems margin profile - Management indicated that tariffs were a significant factor affecting margins, with expectations for incremental price increases in the coming year [28][29] Question: Backlog growth in Energy Systems - The backlog is up year over year, with favorable growth prospects for 2026 driven by ongoing investments in fuel and infrastructure [41][42] Question: Groundwater performance in North America - The groundwater market is expected to remain stable, with low single-digit growth anticipated due to high replacement rates [44] Question: Distribution business margin improvements - Management highlighted strategic cost management and improved efficiency as key drivers for margin enhancements in the Distribution segment [62][63]

Financial Performance - Third quarter 2025 net sales were $581.7 million, an increase of 9% compared to $531.4 million in the third quarter of 2024[2] - Operating income for the third quarter 2025 was $85.1 million, reflecting a 16% increase from $73.5 million in the same quarter of 2024, with an operating margin of 14.6%[7] - Adjusted diluted EPS for the third quarter 2025 was $1.30, up $0.13 or 11% compared to the third quarter 2024[2] - Net income for the nine months ended September 30, 2025, was $109,141,000, a decrease of 26% from $147,317,000 in the same period of 2024[24] - Adjusted diluted EPS (non-GAAP) for Q3 2025 was $1.30, an increase of 11% from $1.17 in Q3 2024[29] Segment Performance - Water Systems segment net sales increased by 11% to $336.6 million, driven by recent acquisitions and organic growth[5] - Energy Systems segment net sales rose by 15% to $80.0 million, supported by higher volumes and price realization[8] - Distribution segment net sales increased by 3% to $197.3 million, also driven by higher volumes and price realization[6] - Operating income for the Water segment in Q3 2025 was $60.2 million, representing an operating margin of 17.9%[28] - The Energy segment reported operating income of $25.4 million in Q3 2025, with an operating margin of 31.8%[28] Cash Flow and Assets - Net cash flows from operating activities for the first nine months of 2025 were $134.7 million, down from $151.1 million in the same period of 2024[9] - Cash and cash equivalents at the end of the period on September 30, 2025, were $102,927,000, a decrease from $106,273,000 at the end of the same period in 2024[24] - Total assets as of September 30, 2025, were $1.997 billion, an increase from $1.821 billion at the end of 2024[22] Guidance and Charges - The company expects full year 2025 sales to be in the range of $2.09 billion to $2.15 billion, with EPS guidance of $4.00 to $4.20, excluding the impact of the pension termination[10] - The company incurred a pre-tax settlement charge of $55.3 million related to the termination of its US Pension Plan, impacting EPS by approximately $0.93 per share[7] - The company reported a pension settlement loss of $41,693,000 for the nine months ended September 30, 2025[24] Debt and Investments - The company experienced a net change in debt of $55,721,000 during the nine months ended September 30, 2025, compared to a decrease of $12,477,000 in the same period of 2024[24] - Acquisitions and investments in the nine months ended September 30, 2025, totaled $109,948,000, significantly higher than $1,151,000 in the same period of 2024[24]