Franklin Electric(US:FELE)2025-10-30 21:29Financial 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]