Earnings call transcript: Franklin Electric beats Q2 2025 forecasts, stock rises

Franklin Electric Co. Inc. reported its second quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $1.31, compared to the forecasted $1.29. The company’s revenue reached $587.4 million, exceeding projections of $566.56 million. Following the announcement, Franklin Electric’s stock rose by 1.55% in pre-market trading, reflecting investor optimism. According to InvestingPro data, the company maintains strong financial health with a "GOOD" overall score, supported by robust cash flows and moderate debt levels. Franklin Electric has also demonstrated remarkable consistency in shareholder returns, having raised its dividend for 32 consecutive years.

Key Takeaways

• Franklin Electric’s Q2 2025 EPS exceeded forecasts by 1.55%.
• Revenue grew by 8% year-over-year, reaching $587.4 million.
• Operating income increased by 11%, with a margin improvement to 15%.
• Stock price increased by 1.55% in pre-market trading.
• Continued focus on innovation and strategic acquisitions.

Company Performance

Franklin Electric demonstrated robust performance in Q2 2025, with significant growth across all its business segments: Water Systems, Distribution, and Energy. The company’s strategic pricing actions and operational efficiencies contributed to improved margins. Operating with a healthy current ratio of 1.98 and maintaining a conservative debt-to-equity ratio of 0.17, Franklin Electric’s financial position remains strong. Despite uncertainties in global markets, Franklin Electric maintained its competitive position and market share, particularly in the residential and international markets. For deeper insights into Franklin Electric’s financial health and growth potential, InvestingPro subscribers have access to over 30 additional key metrics and exclusive analysis.

Financial Highlights

• Revenue: $587.4 million, up 8% year-over-year
• Earnings per share: $1.31, up 6¢ from the prior year
• Gross profit: $211.8 million, representing 36.1% of net sales
• Operating income: $88.1 million, up 11% year-over-year
• Operating income margin: 15%, up from 14.6% in the previous year

Earnings vs. Forecast

Franklin Electric’s Q2 2025 EPS of $1.31 surpassed the forecast of $1.29, representing a 1.55% surprise. The revenue also exceeded expectations, coming in at $587.4 million against the projected $566.56 million. This performance marks a continuation of the company’s trend of exceeding market expectations, driven by strategic initiatives and efficient operations.

Market Reaction

The market responded positively to Franklin Electric’s earnings report, with the stock price rising 1.55% in pre-market trading. This movement reflects investor confidence in the company’s ability to deliver consistent growth and manage market challenges effectively. The stock’s performance aligns with its recent trends, maintaining a position between its 52-week high of $111.94 and low of $78.87. InvestingPro analysis indicates that the stock is currently trading near its Fair Value, with a P/E ratio of 24.33 and generally low price volatility. The company’s strong financial metrics and consistent dividend growth history make it particularly interesting for value-focused investors.

Outlook & Guidance

Looking forward, Franklin Electric has set a full-year sales expectation between $2.090 billion and $2.150 billion, with GAAP EPS guidance ranging from $3.95 to $4.25 per share. The company plans to launch new products targeting the residential market in Q3 and continues to focus on mergers and acquisitions in faster-growing markets.

Executive Commentary

CEO Joe Lisinski stated, "Our strategy is working. We’re excited about our prospects to find the right acquisitions, bring great customer service and innovation to our markets." CFO Jennifer Wolfenbarger added, "We continue to remain confident in our ability to offset for the balance of the year." These statements highlight the company’s strategic focus and confidence in overcoming market challenges.

Risks and Challenges

• Global market uncertainties due to tariffs and commodity inflation.
• Softness in the residential housing market could impact demand.
• Potential supply chain disruptions affecting product availability.
• Competitive pressures in the distribution and water treatment markets.
• Macroeconomic factors influencing consumer spending and investment.

Q&A

During the earnings call, analysts inquired about the impact of potential order pull-forwards, to which the company confirmed none occurred in Q2. Questions also addressed the distribution segment’s margin improvements, attributed to cost actions and operational efficiencies. The company expressed confidence in its ability to manage tariffs and inflation through strategic pricing and productivity measures.

Full transcript - Franklin Electric Co Inc (FELE) Q2 2025:

Andrew, Conference Call Moderator: Hello, and welcome to the Franklin Electric Reports Second Quarter twenty twenty five Sales and Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear automated message advising your hand has been raised.

To withdraw your question, please press 11 again. Please be advised that today’s conference is being recorded. It is now my pleasure to introduce Chief Financial Officer, Jennifer Wolfenbarger.

Jennifer Wolfenbarger, Chief Financial Officer, Franklin Electric: Thank you, Andrew, and welcome everyone to Franklin Electric’s second quarter twenty twenty five earnings conference call. Joining me today is Joe Lisinski, our Chief Executive Officer, and for Q and A section, Russ Swieger, our Water Systems CFO. On today’s call, Joe will review our second quarter business highlights, and then I will provide additional details on our financial performance, and Joe will make some additional comments related to our key growth and value drivers along with our outlook. We will then take questions. Before we begin, let me remind you that as we conduct this call, we will be making forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are subject to various risks and uncertainties, many of which could cause actual results to differ materially from such forward looking statements. A discussion of these factors may be found in the company’s annual report on Form 10 ks and today’s earnings release. All forward looking statements made during this call are based on information currently available and except as required by law, the company assumes no obligation to update any forward looking statements. Earlier today, we published a slide deck to accompany our prepared remarks. The slides can be found in the Investor Relations section of our corporate website at www.franklinelectric.com.

With that, I will now turn the call over to Joe. Joe?

Joe Lisinski, Chief Executive Officer, Franklin Electric: Thank you, Jennifer, and good morning, everyone. Thank you for joining today’s call. Let me start our call today by highlighting our team’s strong results in the second quarter on slide three. It reflects our adaptability, commitment to our employees and customers, and strategic execution. As I finished my first year as CEO and have seen the great work that our price and team is doing to serve, innovate and grow, I’m proud of the progress we’ve made and how we’ve responded to change in a challenging external environment.

All three segments saw organic growth with a good mix of price and volume. Overall, we’ve set new high marks for revenue, income and earnings per share. We delivered a sales record in our water and distribution segments and record operating income in our energy segment. Overall, end market demand is mixed globally and has remained relatively stable. We continue to see encouraging order trends as we exit the quarter, and our healthy backlog gives us confidence in our ability to sustain this momentum as we move forward.

Weather conditions were largely neutral overall. Existing home sales and housing starts remain soft, but our ability to add new customers, deliver the best service in our industry, and bring new products to market have helped us find good paths to enable growth. Importantly, our pricing actions have been successful, helping us protect margins during the recent tariff driven volatility in the market. Our strong top line results and operational execution helped offset some of our hyperinflationary regional markets and several one time costs, mostly expenses related to recent acquisitions, which are integrating well. We also continue to execute our long term strategy, focusing on faster growing markets, capitalizing on our healthy balance sheet, driving efficiency in our global operation, and building processes and teams while continuing to deliver great service to our customers.

While the global markets remain uncertain in the face of tariffs and commodity inflation, we’ve been disciplined in our plans and response and are poised to execute in the second half. Moving to page four. I’d like to take a moment to touch on the incredible team and culture we’re building here at Franklin. Culture has been a strength of Franklin in our storied history, and we’re excited to build on this strong foundation. One of our key tenants is being a great place to work and attracting the best talent.

With that, I’m excited to welcome Jennifer Wolfenbarger as our new CFO. Jennifer joins us with extensive financial leadership experience in global operations, most recently serving as Chief Financial Officer for the Insulation Business at Owens Corning. She brings deep expertise in financial planning and analysis, accounting, operational finance, and strategic business partnerships. And she has led finance teams supporting complex global businesses. We’re confident that her strong leadership and her global perspective will be a tremendous asset to Franklin Electric as we continue to execute our growth strategy.

I would also like to extend my sincere thanks to Russ Liger for stepping in as interim CFO over the past several months. Russ will return to his role as our water systems segment CFO, where his leadership continues to drive meaningful impact. Additionally, I’m thrilled to welcome Daniela Williams as our new Chief Human Resources Officer. Daniela’s deep expertise in HR technology, talent development, analytics, and global workforce strategy will be instrumental in ensuring that we’re well positioned to support our employees and customers well into the future. Thank you to our Global Franklin team, and welcome to our new leaders.

Turning to results on slide five. Overall, we delivered strong consolidated sales growth of 8% with growth across all segments. While gross margin was down slightly, consolidated operating margins reached 15%, driven by strong execution and improved SG and A in our Energy and Distribution segments. Despite the continued macro uncertainty related to tariffs and several onetime acquisition related costs in the quarter, I’m impressed with our team’s response and our ability to drive growth in this environment. Looking at our segment results in more detail.

Water Systems delivered a solid sales result, up 8% year over year, benefiting from favorable pricing, volume and recent acquisitions. Similar to last quarter, the groundwater market remained steady, where we captured strong price realization in The US. We’ve lapped the difficult comparable period in our U. S. Fleet business, and the business exhibited strong growth in the second quarter.

The segment did, however, see a drag on margins as a result of mix stemming from sales related to large dewatering products and the recent acquisition related costs. Energy delivered 6% sales growth, driven by favorable volume and price as international markets and our grid business picked up steam. As we look toward the second half of the year, we’re excited about upcoming projects in places like India and Saudi Arabia. The segment also had strong operating income and operating income margin, with margins improving by 200 basis points. While margins have expanded materially in recent quarters, we expect to remain comfortably around this range in the near term.

We’re optimistic about our grid and asset monitoring business as rebounded nicely and is benefiting from expanded channels and new customer acquisitions. Distribution also delivered a strong quarter with record sales. Despite some negative impacts of storms in another wet year, the segment recorded 5% growth, driven largely by higher volumes. Operating margins improved by 300 basis points, supported by strong operational execution, an improved pricing environment, and the stabilization of commodity prices. This is an encouraging trend for this business.

I’m now going to hand the call over to Jennifer to review our financials in more detail.

Jennifer Wolfenbarger, Chief Financial Officer, Franklin Electric: Thank you, Joe. Our fully diluted earnings per share were $1.31 for the second quarter twenty twenty five versus $1.26 for the second quarter twenty twenty five, up 6¢ from the prior year. Moving to slide six. Second quarter twenty twenty five consolidated sales were $587,400,000 a year over year increase of 8%. The sales increase in the second quarter was due to the incremental sales impact from recent acquisitions and higher volume and price in all three segments, partially offset by the negative impact of foreign currency translation, primarily due to the Brazilian real.

Franklin Electric’s consolidated gross profit was $211,800,000 for the second quarter twenty twenty five, up from the prior year’s gross profit of $199,800,000 The gross profit as a percentage of net sales was 36.1% in the second quarter twenty twenty five, a decrease of 70 basis points compared to the prior year. Moving on to SG and A expense, we’ve seen a 120 basis point improvement in our SG and A as a percent of sales metric for the year over year as a result of cost improvement actions taken in the last year. SG and A expenses were $123,500,000 in the 2025 compared to $120,600,000 in the prior year. The increase in SG and A expense was primarily due to the additional expense impact of our twenty twenty five acquisitions, including various deal related costs. Absent acquisition related SG and A, the company experienced a decrease in SG and A expense year over year of approximately $2,300,000 as a result of actions taken in 2024.

Consolidated operating income was $88,100,000 in the quarter, up $9,000,000 or 11% from $79,100,000 in the prior year. The increase in operating income was primarily due to higher sales and cost management. Operating income margin was 15%, up from 14.6% year over year. Moving to segment results on slide seven. Water system sales in The US and Canada were up five percent compared to the second quarter twenty twenty four.

At a product level, of large dewatering equipment increased 20%. Sales of water treatment products increased 7% driven by the strong addition of dealers to our customer base, and sales of all other surface pumping equipment increased 2%, while sales of groundwater pumping equipment decreased 4% as compared to Q2 twenty twenty four. Water system sales in markets outside The US and Canada increased 12% overall. Foreign currency translation decreased sales by 1% and recent acquisitions added roughly 11% to sales. Excluding the impact of acquisitions and foreign currency translation, sales in the 2025 increased high single digits in Asia Pacific, low single digits in Latin America, and were relatively flat in EMEA.

Water Systems operating income was $61,800,000 down a half a million versus the prior year. The decrease was primarily due to lower gross margin and higher SG and A costs, primarily related to our recent acquisitions, sales mix impact due to higher large dewatering sales in the quarter, as well as negative impact of foreign exchange, partially offset by better volume and price. Operating income margin was 18.1%, a year over year decrease of 160 basis points. Distribution second quarter sales were $200,000,000 versus second quarter twenty twenty four sales of $190,500,000 an increase of 5%. The Distribution segment sales increase was primarily due to higher volumes as a result of share gain and on-site inventory placement projects.

The Distribution Segment’s operating income was $16,100,000 for the second quarter, a year over year increase of $6,300,000 Operating income margin was 8.1% of sales in the second quarter, an improvement of 300 basis points versus the prior year, driven by higher volumes and improved margins as a result of margin improvement actions taken in the last year. Energy Systems sales were $77,500,000 an increase of $4,400,000 or 6% compared to 2024. Energy system sales in The US and Canada increased 6% year over year. Outside The US and Canada, energy system sales increased 14% led by increased sales in India and strong grid growth. Energy Systems operating income was $29,100,000 compared to $26,000,000 in 2024.

Operating income margin was 37.5% compared to 35.6% in the prior year, an improvement of 190 basis points. Operating income margin increased primarily due to the favorable geographic mix of sales as well as price realization and the benefit of cost management actions taken in the last year. The effective tax rate was 25% for the quarter compared to 23% in the prior year quarter. The change in the effective tax rate was driven by an increase in foreign earnings, tax rates higher than The US rate, as well as less favorable discrete items, which had an EPS impact of approximately 3¢. Moving to the balance sheet and cash flows on slide eight.

The company ended the 2025 with a cash balance of $104,600,000 and with $186,000,000 outstanding under its revolving credit agreement. We generated $52,000,000 in net cash flows from our operating activities during the second quarter compared to $36,000,000 in 2024. In Q2, the company purchased a total of roughly 1,400,000.0 shares of its common stock for approximately $120,000,000 Approximately 1,200,000.0 of these shares were purchased from the past Shaper Trust for roughly $104,000,000 As of the 2025, the remaining authorized shares that may be repurchased is about 1,100,000.0 shares. Yesterday, the company announced a quarterly cash dividend of 26.5¢. This dividend will be payable August 21 to shareholders of record on August 7.

Moving to slide nine. We are holding our full year sales expectations of $2,090,000,000 to 2,150,000,000.00 and maintaining our GAAP EPS range of $3.95 per share to $4.25

: per

Jennifer Wolfenbarger, Chief Financial Officer, Franklin Electric: share. During the third quarter, the company expects to terminate its U. S. Pension, which will have a noncash EPS impact of approximately $1 per share. This impact is not included in our current guidance.

While we remain confident in our backlog and our ability to execute, we foresee opportunity in the 2025 to accelerate further investment in the optimization of our supply chain, execute select restructuring, and invest in growth. Therefore, we are maintaining our previous guide. Now, I will turn the call back to Joe for some additional comments.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Joe? Thanks, Jennifer. Turning to slide 10 and bringing back our value creation framework. Our long term strategy is anchored in how we drive growth, execute and transform operationally, deploy capital, and maintain industry leading talent. To drive growth, we continue to focus on innovation, global portfolio expansion, and strengthening our leadership position across key markets.

We have focused on synergies as we’ve grown acquisitively these past years, supporting our ongoing operational efficiency efforts and driving improved standardization across our business. Our recent acquisitions are performing well, and the collective Franklin team is energized by new opportunities from these investments. At the same time, we’re also deeply committed to returning capital to shareholders, as evidenced by our completion of over $100,000,000 in share buybacks this quarter. Finally, we continue to attract top talent, as seen with the additions of Jennifer and Daniela to the team, among many others, all of whom will help support our ambitious growth agenda. Ultimately, we believe these priorities position us to deliver consistent long term shareholder value.

On slide 11, I’d like to give a quick highlight on innovation. An excellent example of our drive to listen to market and our customers’ needs, then bring leading innovation and solutions to our end markets is our new EVO ONE fuel monitoring solution. Tens of thousands of convenience store owners now face a major cost and operational challenge. They rely on outdated fuel monitoring systems that utilize thirty plus year old technology. Upgrading just the control console leaves most of the aging components in place.

This means owners are likely to face future unanticipated downtime coming at a dramatically higher cost as the rest of the system components reach the end of their service life. With EVO ONE, Franklin has provided an ideal path to upgrade the entire monitoring system, utilizing the latest EVO technology perfected for the world’s leading convenience store companies at a price comparable to replacing just the traditional console. We will now turn the call over to Andrew for questions. After q and a, we’ll return for close for closing remarks. Andrew?

Andrew, Conference Call Moderator: Thank you. And our first question comes from the line of Brian Blair with Oppenheimer.

Brian Blair, Analyst, Oppenheimer: Thank you. Good morning, Brian. Everyone. Solid quarter.

: Thank you. Thanks, Brian.

Brian Blair, Analyst, Oppenheimer: So level set, did Q2 benefit from pull forward orders, at least any notable degree? I know that wasn’t the case in Q1.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Really, no change in terms of our traditional order pattern. So at the end of Q2, I would say it was business as usual. Really no significant pull forward from Q3 to Q2.

Brian Blair, Analyst, Oppenheimer: Okay. That’s good to hear. And it was great to see distribution margin back in kind of high single digit territory. How much did cost actions contribute to the 300 basis points margin expansion? And given current visibility, how is your team thinking about distribution profitability through the back half?

Joe Lisinski, Chief Executive Officer, Franklin Electric: Yeah, you know, I think as we started the year, you know, we said our expectation is you’re going to see the most margin improvement in that segment, and you know, it’s reading out as we expected. Cost actions contributed probably, a third or a little bit more of that benefit. But I think what we’re excited about is, and I mentioned this in my prepared remarks, following years of acquisition, we’re really proud of how that team is bringing that distribution network together, focused on operational efficiency, both inbound, how we purchase, how we serve customers, and then building really a strong technology base to be able to give good real time visibility, how customers order, how they can see our products. So, it’s a number of things. But I would say some leverage, some of that operational execution and efficiency just based on really building a more efficient business.

And then, of course, some of the cost actions that we took coming into this year. Expect sorry, in the back half, we expect margins in Q3 to be around that range. And then, of course, seasonally in Q4, sequentially will go down. But from a year over year standpoint, we expect to see nice improvement in the last two quarters of this year as well.

Jennifer Wolfenbarger, Chief Financial Officer, Franklin Electric: I mean, just to add on to that, yeah, I would agree that onethree of that was really from the cost improvements. The team did a really good job in terms of executing on volume, and we were able to pick up some share in that business in the quarter. And a lot of the actions and so forth that the team has taken in terms of cross pollination have really played out in the quarter. Really proud of the team.

Brian Blair, Analyst, Oppenheimer: I appreciate the color. And perhaps offer quick update on integration at PumpEngine and Barnes. Joe, you noted that the deals are tracking well. I’m particularly interested in Barnes and how your team has to date and how you’re thinking about leveraging the foundry capacity and capabilities there?

Joe Lisinski, Chief Executive Officer, Franklin Electric: Yeah, no, it’s a great question. You know, we had a good integration review down in Bogota a month and a half ago. And I think what impressed me is, you know, probably two things. One is our global team and our North American team was there as well. And some of their products, when we look at growth synergies, which is really the driver behind that acquisition, we’re getting a lot of return on our existing and mature channels and how we bring those products to end markets, both in South America and in North America.

So, we’re seeing that run a little bit faster than we thought. From a foundry standpoint, we know that being in region for region is the right way to serve our customers. And Jennifer just talked about our ability to respond to volume. I think it really sets us apart. The foundry is performing well, and we’re actually working on expanding the current footprint.

We had some of that optionality as we acquired the company, so we’re going forward with those investments. And I think it’ll be two things. One is to support the additional volume growth based on that traditional set of products serving now a wider customer base. But also, I think I mentioned this last quarter, looking at bringing some of the tools that may have been in Southeast Asia or in China back here closer to our customers is a real opportunity for us. So there’s some work to do there.

That’s some of the investment that Jennifer called out in terms of we want to accelerate that here in the back half. There’s some capital and expense to do that, But we’ve got good line of sight. The Foundry is performing well, and the teams are executing tremendously. Start.

Brian Blair, Analyst, Oppenheimer: Very encouraging. Thanks again.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Thanks, Brian.

Andrew, Conference Call Moderator: Thank you. And our next question comes from the line of Ryan Connors with Northcoast Research.

Ryan Connors, Analyst, Northcoast Research: Good morning. Thanks, Joe, and welcome, Jennifer. Ryan. Good morning. I wanted to jump into the water side in a little more detail, specifically on mix.

You mentioned their kind of large dewatering and the mixed components there in the water segment. Is that all product driven mix or is there some geographic mix impacts there as well? And then based on the order boards and the backlog today, how does that mix element shape up for water in the back half?

Joe Lisinski, Chief Executive Officer, Franklin Electric: Most of it is really product driven mix, and I can let Russ and Jennifer add to this. But that dewatering business, as you know, is a cyclical business. It kind of has this three year run from peak to trough. We saw that business hit its peak in the 2023, and then sequentially get softer last year. I know we talked about this a few times.

So we see a strong order book and backlog in that business. There will be some mix pressure that we see in that business, but most of it is product mix versus GI. The GI has read out largely as we expected.

Jennifer Wolfenbarger, Chief Financial Officer, Franklin Electric: I would just add

: that

Jennifer Wolfenbarger, Chief Financial Officer, Franklin Electric: both groundwater and dewatering, solid, very healthy volumes, just saw a little bit of that product mix play out. Book to bill, very healthy, above one. It varies across geographies a little bit, but all really healthy above one with strong backlogs.

Joe Lisinski, Chief Executive Officer, Franklin Electric: I think, Ryan, you’ll see less pressure from a margin standpoint. So that mix is kind of hard to pull out because we definitely as we accelerate that acquisition, we still are seeing some of those acquisition related costs in Q2, which diminished through the back half of the year.

Ryan Connors, Analyst, Northcoast Research: Got it. Okay. And then secondly, just talk about resi for a minute. I know it’s an important market, it seems like everyone’s waiting on a potential for a rate cut and then maybe lower mortgage rates to drive that. I mean, that the only catalyst that we’re banking on here or are there other potential analysts that can drive some more volume growth in that side of the business?

Or we just sort of is that really the catalyst that we’re waiting on?

Joe Lisinski, Chief Executive Officer, Franklin Electric: Well, I’ll take a stab at that. But that business was flattish for us, obviously, in Q2. Think to say that we’re getting no help from the market is true. We’re in the same boat as everyone else. A couple of good things about our business, when we talk about other things we look at, one is, given our high service and replacements demand, that business is 70 plus percent replacement for us.

Our ability to serve that market has held us to hold and even take share in some cases. We believe that we’re taking share there. I also think and I think I mentioned one example, and if I didn’t, you’re going to hear more about it here in Q3 some really exciting new products that attend to that Resi market that we’re just launching right now. So I think new products innovation, being able to respond to our customers, all of those things help us to offset that weaker housing starts and housing sales. One thing that I’d point out too is and I think we commented on this, if you look at our water treatment business, which is probably has a more direct correlation to housing starts and sales than others, the fact that that business grew mid plus single digits, I think, is a testament to just that growth strategy, which is dealer ads, building a strong network, out serving our peers.

So we had a nice set of dealer ads as well, again, in Q2, I think Jennifer referenced. So we think that there’s some self help there that can offset that soft resi market, and Q2 demonstrated that for us.

Ryan Connors, Analyst, Northcoast Research: Yep, got it. And then one last one, kind of a bigger picture question. Through the dewatering business and otherwise, Franklin long been seen as somewhat more mining resource driven than maybe some of the peers. When you look at some of the things happening like the copper tariffs and supposedly the method of madness there being to bring more resource development back domestic. Do you view that as a catalyst or has the portfolio changed to the point where that’s not the driver that it once was?

Joe Lisinski, Chief Executive Officer, Franklin Electric: Well, I think if you go back you know, five plus years, we actually were more exposed to markets like oil and gas and other things. So that has come way down and we’ve seen that balance. I think just in general, if we look at mining, if you look at materials and minerals, think there’s an opportunity there for us. We don’t have a huge exposure to it in North America, as you referenced before, but we’re working on bringing those products into North America post acquisition of companies like MINTOF and PumpEdge. And it’s copper, there’s other metals and materials where we see continued growth.

So I think that’s an opportunity for us. It’s relatively small for us today. But if that market continues to grow, and if you see the need for minerals and the domestic development continue to increase, we’ll be prepared for that.

Ryan Connors, Analyst, Northcoast Research: Got it. Thanks for your time this morning.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Yeah, thank you, Thank

Andrew, Conference Call Moderator: you. And our next question comes from the line of Mike Halloran with R. W. Baird.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Hey, good morning, everyone. Good morning, Mike. Good morning.

: Maybe we just start with how you’re thinking about the sequential trends and what’s embedded in guidance. With all the moving pieces, if you just think about it in terms of end user demand across segments and anything unusual and you think you’re following a relatively normal cadence here. And if I think about what the guide for the back half of the year implies, does it imply normal seasonality from here, normal sequentials, or is there any kind of variance as you think about it, whether in the quarter or embedded in the guide?

Joe Lisinski, Chief Executive Officer, Franklin Electric: Yeah, it’s a good question, Mike. Maybe I’ll start with coming into and as we went through Q2, which, you know, if you look at headlines, if you look at tariffs, if you look at the noise globally, normal we didn’t think we’d use that term normal in terms of obviously, we executed well, we’re really proud of what the team has done, but, you know, it was a more normal market than we had thought. We see those trends continuing here into the back half. Know, we’re a couple weeks in. The backlog, the order trends, the order book look good.

Parts of our business that we can see further out, we talked about dewatering, that’s one example in the water space. But in the energy segment, where we can see further out there in terms of our service partners and the service stations, everything looks positive. So based on backlog order trends and kind of a snippet here as we get into Q3, we expect it to be fairly normal, just to use that word. So we don’t expect any major disruption. I think to the other questions, obviously we watch interest rates, we watch some of those other externalities that could provide a lift to us.

Not baked in, no expectation. Our sense is it’s kind of business as usual in the back half. So yes to normal and yes to kind of the seasonal sequential. So Q3 looks similar to Q2, and then Q4 the sequential. It’s obviously a step down, but we expect to perform well.

Jennifer Wolfenbarger, Chief Financial Officer, Franklin Electric: From a tariff and from a copper perspective, I think we’re really proud the work that our supply chain has done to look for various levers to pull to mitigate that. And we continue to remain confident in our ability to offset for the balance of the year. And that holds true from a tariff perspective, from a copper perspective. We’ll continue to look at multiple paths to win.

: Thanks for that. And then just as a follow-up, just an update on how you’re thinking about the M and A pipeline, intent, actionability. I know that’s part

Joe Lisinski, Chief Executive Officer, Franklin Electric: of the

: mandate for the team moving forward. So just kind of any thoughts on how that’s looking and where the focal points are.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Yeah, we’ve made some really fun investments and had a specific focus here over the last three quarters to make sure that the pipeline is robust, that our team is ready to execute. And the one nice thing, Mike, in the last couple months is you definitely see a little bit more activity in terms of, you know, kind of what’s out there and some things that will potentially move. So, we’re positive about it. We’ve got a good and an active funnel. You know, and I think similar to what I said last quarter, kind of our key focus right now is what are those products that can really put us into those faster growing markets, you know, take advantage of secular trends, and that we can bring through our great channel.

So, we expect that we’ll continue to be active. It’s always hard to predict what happens and when it happens, but that still is the mandate to make sure that we put that strong balance sheet to use.

: Thank you. Really appreciate it.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Thanks, Blake.

Andrew, Conference Call Moderator: Thank you. And our next question comes from the line of Matt Summerville with D. A. Davidson.

Jennifer Wolfenbarger, Chief Financial Officer, Franklin Electric: Morning, Matt.

Matt Summerville, Analyst, D.A. Davidson: Good morning. I apologize if you already addressed this. I missed some of the prepared remarks. But you reiterated your EPS guide for the year, yet you bought back 1,200,000.0 shares of stock from one of Franklin’s founding daughters. Can you sort of articulate maybe why not raise the bar from a guidance standpoint?

And then I have a follow-up.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Yeah, maybe I’ll start and then Russ and Jennifer can add to that. I think, one is, as you know, we had a slower start to the year. Two is, we’ve got a fairly ambitious agenda in terms of accelerating our transformation, making some of those investments. I referred to just some examples in terms of near shoring tools in our supply chain. I mean, this is a big focus and we want to go faster to control our destiny.

So I think part of holding guidance is giving us the room to execute. There is a small benefit we got from obviously purchasing some of those shares. But I think the fact is we feel we’re undervalued. I think our execution in Q2 is a good example of what we expect and hope to see going forward. But we also are focused highly on predictability, and we want to make sure that we prepare ourselves for further supply chain disruptions.

We’ve got a couple bigger capital investments that we’ve accelerated. Two examples, I may have referenced these in the past. We have a factory in Turkey that we’re going faster on that we originally intended. And then we have a factory that we’re building in India that we want to get started and get moving. So I think it’s just making sure that one, we’re predictable.

Two, we have room for transformation and for those key investments we think are important. But our intent is to grow and to serve the markets that we’re in, and we feel that this is the best route for us here where we sit.

Matt Summerville, Analyst, D.A. Davidson: Thank you for that.

Brian Blair, Analyst, Oppenheimer: Sure. Yeah, was just going to say the investments that Joe referenced are heavily back half loaded. So that does impact the go forward as well.

Matt Summerville, Analyst, D.A. Davidson: That’s helpful. Thank you. And then just as a follow-up, can you talk about strength in orders and backlog. Can you maybe give a little bit of quantification around how those metrics look now versus this time last year? And can you review where you were at from a price cost standpoint in the second quarter and what you expect in the back half in that regard?

Thank you.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Yeah, maybe just a comment, refer to Jennifer on some of this, but from a backlog standpoint, backlogs are probably up overall in the low double digits. Some of the segments, they’re up more than that. As you know, Matt, we’re a shorter cycle business for a good portion, so we look at book to bill as well. Book to bill is over one for all three segments. I think that’s one of our better indicators.

Where we can see out further, we definitely have seen a nice uplift in backlog. The energy segment, I referred to that. So from a year over year standpoint, as we give those reference points for backlog, that’s kind of a good year over year view. And then from a book to bill standpoint, this is just we look at the churn, we look at our daily orders, we look at what’s happening even for our shorter cycle businesses, and it gives us really a good pattern and understanding of kind of what’s going happen here, at least in the near term, which says Q3, we feel pretty good about. From a price cost standpoint, yeah, we can give you, maybe Jennifer, if you want to just talk about price cost volume here in Q2.

I think I have those numbers here as well, but it was a good blend and a good mix.

Jennifer Wolfenbarger, Chief Financial Officer, Franklin Electric: Yeah, overall from a price to the cost perspective, we were in really great shape versus the prior year. From a volume perspective, we talked about that throughout our prepared remarks, seeing a bit of an uplift year over year from a volume perspective as we’ve taken share in a few places, namely distribution, a bit in energy, seeing really good performance in energy with regard to international data center projects and grid growth. And then as I mentioned, price over cost, including the impact of a little bit of impact that we’ve seen in tariffs, we’re covering that nicely.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Yes. And sorry for the F-sixteen noise in the background here in Fort Wayne. But yeah, price productivity definitely more than offset inflation. And I think, you know, seeing a couple points of pricing, you know, more than a few points of volume, I mean, those good indicators for us to see that balance. One thing you’ll see, Matt, is the inflation, and some of this due to tariffs and the purchases that we had to make in Q2.

Some of this will read out a little more strongly

: in

Joe Lisinski, Chief Executive Officer, Franklin Electric: the back half. So they’ll be little closer in terms of the price and inflation, but we expect it to be a positive story this year. I would add to that, that some of the tariffs that could have been or that we saw throughout the quarter, we were prepared to do more in terms of our productivity, inventory and price action. You know, I think where we ended up in the quarter is we feel we’re pretty good we’re pretty well positioned here in the back half to more than offset tariffs, inflation, etcetera.

Matt Summerville, Analyst, D.A. Davidson: Thank you, guys.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Thanks, Thank

Andrew, Conference Call Moderator: you. And I’m showing no further questions at this time. So, that, I’d like to hand the call back over to CEO, Joe Rosinski, for any closing remarks.

Joe Lisinski, Chief Executive Officer, Franklin Electric: Thanks, Andrew, and we really appreciate the questions. As we close out our Q2 twenty twenty five earnings call, I want to extend my sincere thanks and gratitude to our employees and stakeholders for the dedication, hard work, and unwavering commitment. We had a solid Q2 and first half. With good order trends and healthy backlogs, we expect this to continue. Holding guidance gives us the opportunity to accelerate our transformation and position us well for ’twenty six as we continue to monitor the act and act on tariffs and other disruptions to our market.

Our strategy is working. We’re excited about our prospects to find the right acquisitions, bring great customer service and innovation to our markets, and to continue to build on the great team and culture Franklin is known for. Thank you for joining us, and I hope everyone has a great week.

Andrew, Conference Call Moderator: Ladies and gentlemen, thank you for participating. This does conclude today’s program, and you may now disconnect.

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