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]

Core Insights - Franklin Electric Co., Inc. reported third quarter 2025 net sales of $581.7 million, a 9% increase from $531.4 million in the same quarter of 2024 [3][12] - The company achieved an operating income of $85.1 million, reflecting a 16% increase compared to $73.5 million in the prior year [3][12] - The diluted EPS for the third quarter was $0.37, down from $1.17 in the same quarter of 2024, primarily due to a pension settlement charge [3][12][27] Financial Performance - Third quarter 2025 adjusted diluted EPS was $1.30, an increase of $0.13 or 11% compared to the same period in 2024 [3][27] - The company’s operating margin for the third quarter was 14.6%, up from 13.8% in the prior year [12][28] - Net cash flows from operating activities for the first nine months of 2025 were $134.7 million, compared to $151.1 million in the same period of 2024 [9] Segment Performance - Water Systems segment net sales reached $336.6 million, an increase of $34.4 million or 11% year-over-year, with operating income of $60.2 million [6][12] - Distribution segment net sales were $197.3 million, up $6.5 million or 3% from the previous year, with operating income of $16.3 million [7][12] - Energy Systems segment net sales increased to $80.0 million, a 15% rise compared to the prior year, with operating income of $25.4 million [8][12] Strategic Initiatives - The CEO highlighted the company's focus on expanding its global manufacturing footprint to enhance efficiency and capture growth opportunities [4] - The company is maintaining its full-year 2025 sales guidance in the range of $2.09 billion to $2.15 billion and EPS guidance of $4.00 to $4.20 [10][12] Market Outlook - Order activity remains healthy, providing confidence in the company's outlook despite macroeconomic uncertainties [5] - The company continues to emphasize pricing discipline and cost control while balancing capital allocation to drive shareholder value [5]

Investors interested in Manufacturing - Electronics stocks are likely familiar with Franklin Electric (FELE) and Schneider Electric SE (SBGSY) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphas ...

Core Points - Franklin Electric Co., Inc. declared a quarterly cash dividend of $0.265 per share, payable on November 20, 2025, to shareholders of record on November 6, 2025 [1] Company Overview - Franklin Electric is a global leader in the production and marketing of systems and components for the movement of water and energy [2] - The company serves various sectors including residential, commercial, agricultural, industrial, municipal, and fueling applications [2] - Franklin Electric has been recognized in Newsweek's lists of America's Most Responsible Companies and Most Trustworthy Companies for 2024, as well as America's Climate Leaders 2024 by USA Today [2]

Industry Overview - The Zacks Manufacturing - Electronics industry is positioned to benefit from stable demand in electronic services, advanced manufacturing technologies, and product innovation efforts, with a surge in e-commerce activities aiding growth [1] - The industry comprises companies manufacturing electronic products such as battery chargers, power transmission products, and water-treatment products, with a focus on customer support and after-market services [3] Current Challenges - A slowdown in the manufacturing sector and supply-chain issues are negatively impacting some industry participants, with the Manufacturing Purchasing Manager's Index at 49.1% indicating contraction [2][4] - Supply-chain disruptions, particularly regarding electrical and electronic components, remain a concern, as reflected in slower deliveries reported by the ISM [4] Market Trends - Despite manufacturing slowdowns, demand in key end markets remains stable, with electronics manufacturers benefiting from the adoption of advanced manufacturing technologies [5] - The industry is experiencing positive momentum in the medical and life sciences markets, driven by strong demand for products and solutions [5] Technological Advancements - Industry players are increasingly digitizing operations to gain insights into performance, demand cycles, and supply-chain issues, enhancing competitiveness through improved productivity and product quality [6] Industry Performance - The Zacks Manufacturing - Electronics industry holds a Zacks Industry Rank of 84, placing it in the top 35% of 243 Zacks industries, indicating bullish near-term prospects [7][8] - The industry's earnings estimates for 2025 have increased by 0.1% over the past year, reflecting analysts' confidence in earnings growth potential [9] Comparative Performance - Over the past year, the industry has outperformed the broader sector with an 8.9% growth compared to the sector's 1.6% rise, but underperformed the S&P 500, which increased by 17.5% [11] Valuation Metrics - The industry is currently trading at a forward 12-month Price-to-Earnings (P/E) ratio of 22.44X, slightly below the S&P 500's 23.39X but above the sector's 19.75X [14] Notable Companies - Franklin Electric is well-positioned due to strong demand in the Water Systems segment, with a 0.5% increase in earnings estimates for 2025 [18][19] - Powell Industries benefits from strength in the oil and gas markets, with shares rising 34.4% in the past year [22][23] - Emerson Electric is experiencing solid momentum in its Final Control business, with a slight increase in earnings estimates [25] - Eaton Corporation is benefiting from rising demand in AI-data centers and global reindustrialization trends, with an 8.1% increase in share price over the past year [28][29]

Core Thesis - Franklin Electric Co., Inc. is positioned as a compelling investment opportunity due to its critical role in water and fuel infrastructure, high-margin growth potential, and stable demand across its segments [1][4]. Company Overview - Franklin Electric, founded in 1944, initially produced portable generators and later shifted focus to water systems, creating the first commercially viable submersible motor in 1953, which significantly improved agricultural efficiency and global food security [2]. - The company's Water Systems segment remains central to its operations, reflecting a history of technological leadership and consistent demand, including specialized solutions for mining and construction [3]. Financial Performance - As of September 30th, Franklin Electric's shares were trading at $95.20, with trailing and forward P/E ratios of 24.64 and 20.16 respectively [1]. - The Energy Systems segment, while accounting for approximately 13% of revenue, contributes over 30% of operating income due to high operating margins exceeding 30% [4]. Market Position and Growth Opportunities - Franklin Electric provides essential infrastructure solutions that support agriculture, construction, and fueling systems, leading to durable demand and resilient cash flow [4]. - The company benefits from secular tailwinds in water management, energy infrastructure, and regulatory compliance, making it a stable, high-margin industrial operator with significant growth opportunities [4].

Core Points - Franklin Electric Co., Inc. will release its third quarter 2025 earnings on October 28, 2025, at 8:00 am ET, followed by a conference call at 9:00 am ET to discuss earnings and business developments [1] - The conference call will be accessible via a live webcast, and participants can register for the question-and-answer portion of the call [2] - A replay of the conference call will be available from October 28, 2025, through November 4, 2025 [3] Company Overview - Franklin Electric is a global leader in the production and marketing of systems and components for the movement of water and energy, serving various sectors including residential, commercial, agricultural, industrial, municipal, and fueling applications [4] - The company has received multiple recognitions, including being named in Newsweek's lists of America's Most Responsible Companies 2024 and Greenest Companies 2025 [4]

Core Insights - Franklin Electric (FELE) currently presents a more attractive investment opportunity compared to ABB (ABBNY) for value investors based on various financial metrics and rankings [3][7]. Valuation Metrics - FELE has a forward P/E ratio of 22.65, while ABBNY has a higher forward P/E of 28.57 [5]. - The PEG ratio for FELE is 1.89, indicating a more favorable growth outlook compared to ABBNY's PEG ratio of 2.24 [5]. - FELE's P/B ratio stands at 3.29, significantly lower than ABBNY's P/B ratio of 8.96, suggesting that FELE is undervalued relative to its book value [6]. Zacks Rank and Value Grades - FELE holds a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while ABB has a Zacks Rank of 3 (Hold) [3]. - The Value grade for FELE is B, reflecting its stronger valuation metrics, whereas ABBNY has a Value grade of C [6]. Conclusion - Overall, the combination of stronger estimate revisions and more attractive valuation metrics positions FELE as the superior choice for value investors at this time [7].

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