Franklin Electric (FELE) investor relations material

Executive summary

• Q3 sales rose 9% YoY to $633.6M; adjusted operating income increased 11% to $95.4M and adjusted diluted EPS rose 15% to $1.50.

• Distribution and Energy Systems led growth, supported by healthy orders, customer activity and backlog.

• FY2026 sales and adjusted diluted EPS guidance increased; higher material and freight costs and regional softness remained headwinds.

Financial highlights

• Q3 sales were $633.6M versus $581.7M; growth reflected 4% from price and volume, 4% from acquisitions and 1% from FX.

• Gross profit was $224.0M, up 7%; gross margin declined 50 bps to 35.4% amid material and freight costs and manufacturing site-move inefficiencies.

• Reported operating income was $86.5M, up 2%; adjusted operating income was $95.4M, up 11%, with a 15.1% adjusted margin.

• Reported diluted EPS was $1.35 versus $0.37; adjusted diluted EPS was $1.50 versus $1.31. Prior-year reported results included a $55.3M pension settlement loss.

• 9M sales rose 8% to $1.757B and net income increased to $161.8M from $109.1M.

Outlook and guidance

• FY2026 sales guidance increased to $2.23B–$2.30B and adjusted diluted EPS guidance to $4.62–$4.82; guidance excludes Challenge Pumps.

• Outlook reflected organic growth, solid demand and backlog, and a mid-single-digit sales contribution from 2026 acquisitions; assumptions included a soft macro environment.

• Water Systems Q4 sales were expected to grow mid- to high-single digits; site consolidation and restructuring work was expected to be mostly complete in 2026, with productivity benefits in 2027.

• Pricing discipline, inflation mitigation, productivity and operational execution remained priorities; management expressed confidence in the base business entering 2027.