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]

Franklin Electric (NasdaqGS:FELE) Q3 2025 Earnings Call October 28, 2025 09:00 AM ET Company ParticipantsJennifer Wolfenbarger - CFOJoe Ruzynski - CEOBryan Blair - Managing Director of Equity ResearchConference Call ParticipantsWalter Liptak - Industrial AnalystMike Halloran - Associate Director of Research and Senior AnalystMatt Summerville - Managing Director and Senior Research AnalystRyan Connors - Managing Director and Research AnalystOperatorToday, and welcome to the Franklin Electric third quarter 20 ...

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]