FELE - Earnings call transcript Q4 2024 | Franklin Electric Co., Inc.

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Operator

Hello, and welcome to the Franklin Electric Reports Fourth Quarter and Full Year 2024 Results Conference Call. Please be advised that today's conference is being recorded.

It is now my pleasure to introduce Chief Financial Officer, Jeff Taylor.

Jeffery Taylor

Thank you, Andrew, and welcome, everyone, to Franklin Electric's Fourth Quarter and Full Year 2024 Earnings Conference Call. With me today is Joe Ruzynski, our Chief Executive Officer. additional will provide fourth financial drivers, additional Joe make Joe then business performance, along call, our will will to I details some with today's our review and quarter our highlights, and key outlook. On growth related value comments on our

will We take questions. then

risks many to which are discussion Private cause you differ XXXX. Before making the earnings be within annual could forward-looking remind we materially factors to Securities Reform today's this of A and that subject the company's Act found release. Litigation begin, statements these and we me statements. call, conduct These statements meaning as let report of we uncertainties, be XX-K actual on in the from results such various of of Form may will forward-looking

today, call to the All except and assumes required currently statements during Investor forward-looking any at prepared found deck made of corporate www.franklin-electric.com. remarks. update Relations based slides forward-looking website published no on information can the in our The available, are Earlier be to accompany by we company obligation a our law, section slide as this statements.

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

Joseph Ruzynski

the the [ for we're volumes the Good our continue efforts that a execution, in the on our macroeconomic some joining Order Thanks, marked resilient thank improve ] lies through growing year global share focused breadth about restructuring, saw coupled throughout a and work the some close call. in and morning, by challenging business. to This, Jeff. with the to Franklin portfolio us I'm proved pleased excited everyone, back solid team's of year, strong international today's XXXX. help delivered opportunity you that team year. markets grow of We our faster uncertainty. ahead and half to a

energy would of the portfolio systems. quarter, Fueling Systems we into point unchanged Systems to name remains with the I structure. segment our that within along we've Energy reporting like transitioned briefly Before The to jump our out product

transition offerings, only. products our up this need which We several and base major in revenues. applications see in name for the energy-related grid the time, strengthening. and solutions such both as data smart Over good our is growing of launched we've So wider this now make critical XX% marketers business, about in asset monitoring segment, in utilities, serving centers and segment's power products

and our the change aligns While believe fueling strategy long-term have our and we to closely historical remain business positive more today goals. products of nature the this core outlook, our a with

solve, Page We team We I problems and our help some of Moving a the on its deck. past promise. our this and year. to X slide to take all want believe past our our achieved recognition customers has we its with our year. people want and starts great highlight thank of hard company the their for to to pride team commitment in culture I this work the

strong systems and challenging mentioned which in over mix pricing notable by quarter. more charges, This improvement margin Water results. energy and Now partially this and up cost quarter This prior management year X. offset Energy Growth disciplined we million and continued in the sales, the down supported Water the sales were Systems a the remained with FX product restructuring over on Systems was X% turning our Operating and global Consolidated from a Distribution quarter to geographic drove in the margins for prior while fourth million, unfavorable our last of pressure streamlined year. totaled U.S. results the X%, performance, period. flat. this segments Slide business headwind, was $X segment operations Systems $XXX reflects

enter we in our We actions XXXX XXXX. to benefit as productivity us implemented expect

macroeconomic environment. a environment. challenging with Looking interest parts faced a at of post-COVID neutral normalization full we remain growth of net elevated Having demand Housing year [indiscernible] softer in efforts capturing our despite from our through backlogs, various rebound of rates throughout impact experienced business worked and starts I'm of a proud team's paired high. we XXXX, weather. demand

global Our reinforcing challenging the strong key our Growth APAC value it international business presence. our Latin a the is Europe, in footprint insulation can important regions against differentiator remained provide and and the of diversified of throughout environment. America year,

with we're translation opportunities in to forward currency present to looking is capitalizing healthy ratio continues and our XXXX. trends, foreign headwinds, While book-to-bill favorable on order

on across segment underlying acquisitions large by Canada, and let's were In most remains quarter negative small Outside was Now the and from healthy. exchange X. prior spots quarter foreign the look flat closer to robust and U.S. as offset Systems full pumps compared encouraging. pumps and The dewatering for performance year and Slide impacts the volumes were from for fourth up sales the within sales year. the groundwater delivered year-over-year take regions. performance demand a contributions Water segment's Favorable surface at our U.S. were bright our the

of challenges peso Argentina, driven by impacted the results. Argentine So the in devaluation

and we full supply constraints. Water as Momentum fleet normal backlogs we of end improved of large business sales stemming in comparable solid products for a expect towards year, chain higher was the U.S. growth and dewatering the year, strong segment as progress more through we year the our For pullback from despite XXXX. pent-up the from lapped a demand

set definitive vertically help beyond. strengthen position with a We've America strong projected de agreement Latin for in complementary March. well products pumps and completed month. in Australia, like and our would systems commitment very a a will footprint growth opportunities that to acquisition in our of America and water we and this also us Barnes complements business operating grow Latin company signed business. our call submersible our to overall a industrial A recently integrated in a close on portfolio sector to bring in executing early identifying I that and also our underscores the mining out specializing framework that for strategic aligns Columbia with existing

Energy was the in the for Systems quarter the U.S. favorable remained higher digits, where mid-single fourth demand driven strong segment, both up by particularly were Sales resilient. volumes. pricing and In Performance

to Looking for backlogs fourth and as the to through a they and while result to management due disciplined X% first with against achieved new year-over-year a sales approach investments. elevated Energy a quarters reflecting slower a segment were record segment start at margin the the up the our comparison efficiency. strong cost the operational quarter, challenging as delivered year, X Nonetheless, were operating year a full XXXX, down

performance Margin fourth was sequential quarter from in as through earlier which the by driven lower quarter operating The actions full impacted commodity seasonality, volume cost quarter Distribution to in addition segment and we during increase pricing grew Distribution's by volumes factors from in year. and on similar declined with leverage. reduction the worked XXXX. driven normal digits results pressure the fourth the contributions the in favorable an mid-single the acquisition throughout year

we see coming price trend in The decline year. in the norm, lasted expect longer historical to the stabilization and than

have ensure little structural operations will to bringing to irrespective on we of pricing control we driving our environment, trends. improvements products margin commodity pricing over new we to continue While and deliver focus profitability value-added customers streamlining our

back call to detail. to Jeff more to financials now going hand I'm review in our the

Jeffery Taylor

Joe. Thanks,

per the $X.XX earnings for quarter $X.XX share XXXX diluted of quarter for fourth the versus were fully XXXX. Our fourth

end were to our of we year, deliver prior high the at the from pleased results guidance range. down While

acquisitions consolidated primarily from $XXX.X foreign from segments quarter X%. sales incremental a sales impact impact the Slide was the sales across fourth early primarily Moving by XXXX to Fourth were negative translation. X year-over-year X. to higher million increase XXXX, The and completed offset volumes of the in increase currency quarter due all in

Franklin $XXX.X million prior sales the year-over-year Electric's the of to quarter, or The quarter Selling, was expense was the acquisitions. and quarter year. XX.X% administrative in percentage in SG&A, primarily and profit for fourth from higher expenses, consolidated flat The $XXX.X costs to to were in a employee fourth gross impact million our XXXX, compared fourth compensation quarter expense incremental net million increase. in XXXX the as SG&A prior the was profit increase due the compared of a gross the $XXX.X year. fourth general X%

restructuring million fourth Restructuring of from of quarter expenses quarter XXXX. down or the was XX% XXXX. The optimize costs reductions $XX.X and impacted cost actions operating our to share income We the negatively fourth million $X.XX income and up head primarily income margin the X.X% per XXXX The were was XXXX. in XXXX, XXXX related $X.X was Restructuring XX.X% quarter quarter XXXX operating in costs. Restructuring the quarter million earnings fourth facility during quarter. the closures of in million the fourth to sales by count $X.X in versus in Consolidated structure. from SG&A $X.X net $XX.X higher of fourth in primarily in due operating decrease fourth million

were sales other Water in the fourth to water surface sales Offsetting the X% and of Canada Water on Sales markets X% pumping to U.S. increased compared XXXX. U.S. increased dewatering to X% equipment increased compared by decreased equipment equipment XX% down pumping treatment of sales of Canada XX%. large quarter the the Sales compared and results all XXXX. in the sales Moving groundwater Systems segment of overall. to increased Systems outside of products X% X. increased Slide XXXX. and

the Asia translation by America, decreased increased sales Pacific XXXX impact currency and of EMEA, in U.S. in all markets, the quarter foreign Latin Foreign currency fourth sales of Canada, Outside excluding translation. the X%. major and

million Operating volumes pricing $X.X was of X.X% fourth fourth fourth fourth geographic sales million, The incremental early Distribution's points. negative exchange basis a in down was as of million. from versus in X.X% in sales a was sales due decrease and $XXX.X operating the year. quarter result impacts, Distribution million, of decrease Operating segment distribution income million $XX.X The The unfavorable a income XXX of $X.X higher $XXX.X XX.X%, acquisition segment's XXXX due foreign higher of million decrease was partially in to income quarter a the lower income primarily by increase operating XXXX restructuring Systems margin XXXX. costs fourth the for negative sales quarter to prior impact sales sales year-over-year versus XXXX, gross expenses. and declines. $X.X margin X%. quarter recent the the the Water of margin increase of and SG&A primarily an commodity year-over-year was quarter was versus of impact mix of were offset

XXXX. renamed XXXX. of sales the fourth to served we the Systems quarter or Systems an X% customers and and Energy increase the business. quarter Energy our reflect compared our Systems operating The in Energy sales portfolio prior fourth strategy, segment by Recognizing Systems $XX.X and U.S. to XX.X% year. of operating million, of $XX.X were XXXX. better and of million this million to quarter fourth Energy $XX.X to XX% the the U.S. was the compared in $X.X the Fueling markets in evolving increased Systems of sales compared Canada, compared net X%. XXXX income to Outside decreased margin to quarter Systems the fourth Canada was XX.X% income fourth in Energy quarter million sales

Operating for driven rate by was prior income geographic approximately favorable realization primarily discrete favorable to margin year items manufacturing effective of and and EPS in increased change had of the The cost tax to quarter improved impact productivity an of the on management. XX.X% price The $X.XX. sales, and effective in due tax a mix was XX.X% EPS compared quarter. the rate

XXrd We the from to cash operations XXXX $XX cash quarter generated on The common X. of million of in cash sheet its working to $X.XXX. the conversion returning to in at XXXX. has demonstrating the on mark and XXXX. And strong outstanding reducing dividend end shares. cash the repurchase the its X.X company year flows announced remaining was year, open Slide any stock commitment million due in of the last fourth capital. shares progress flows balance agreement. for quarterly during and its increase $XXX.X of approximately consecutive cash the of fourth shareholders balance dividend outlook to quarter company that will not the the At increased $XXX.X quarter, million share authorization on cash fourth company did ended dividend, Moving continued flow This business. repurchase confidence month, revolving to market Electric activities the a a the Franklin of XXX% with X% credit Free is during the the in net The and million

in acquisitions year including to expects the XX. GAAP range its recently Slide the million of XXXX be to the to per Moving announced to impact in $X.XX or sales, earnings in our company full share of to be billion range $X.XX of EPS $X.XX $X.XX. The

impact pension we are process successful, Additionally, our which, results. terminate would if a primary initiating our to U.S. XXXX plan,

potential a move provide as from not we the through termination and We any during process. this assumed have will guidance, pension we in impact our year XXXX updates

turn I'll some additional comments. back Joe to for the Now call

Joseph Ruzynski

Jeff. Thanks,

up we on on our to wanted for open and road thoughts our few ahead starting it valuation Before share I Q&A, a XX. framework Slide

continue only grown. investors, to my with customers Franklin opportunity has is Electric teams, optimism our I As global for investment time a spend and compelling

Our to acceleration, value investments growth decision-making we valuation strive guide framework resilient stakeholders. centers and serve X margins, our for pillars: talent. as and to around retaining and key attracting will These strategy deliver elements industry-leading our strategic

We of to are, believe we and Wherever and strive business, legacy have global geographies heart of verticals. is to share which markets focus drive can in and end the and on various our the growth the strong we gain the greatest. new we deliver our be operate market capability to by partner faster-growing our our position With at leveraging choice. and solutions customers' relationships where and accelerate we amplified network, by are our leadership needs innovation products we both innovative

or Our excited simplification about the tools. Franklin on system, forefront. it optimize productivity resilient our possible our the enterprise productivity ability are I'm made with business objectives data continued portfolio is and to margins operating efficiency. always which data is employ Whether digital the by And and to the increase we across

capital For and several growth, that create strengthen we value our deployed position. across market our investments, drive priorities

strategy. aligned in and more supporting pipeline M&A touch is Our going with the a these active to moment. activity and our just on I'm

our organization incredibly a we've numerous heard attracting that team. and ensuring testament and the developing these pieces are The awards an to Finally, our putting talent as to all achieved top talent in commitment feels is together safe talented respected workplace.

XX. our capital value can accretive priorities. Starting Slide and on a to lever key deeper our delivering performance to to allocation delivering with our -- We value Turning take a for shareholders. dive M&A,

so, year our the been or past slower acquisitions pace excited has we're of pipeline. While over about robust the

focus with growing businesses and product-based and on disciplined Our acquiring align remains profitable framework. capacity evaluation priorities expansion strategic that and our

execute historically While deal have are opportunity on itself. a we ready completed bolt-on teams to able our acquisitions, many strategic the right and presents if

active. are and The market Expectations the is valuations and healthy market normalizing. in is

sheet. We balance an position advantageous the of given also health see our

to X our a within continue on guide be a We but assess must years to ] achieve opportunities target [ basis, ROIC accretive able general Acquisitions clear. X deal-by-deal within years. are posts and

growth growth. side, investments a the organic digital which through innovation capabilities. set rate, and market On in we annual compound is achieved above capacity,

capital product consistent advance XX Our for have the critical energy solutions and years, in expenditures our water Reinvesting the market alone. deliver success, position our over our to been globe. in is nearly supporting new needs launches in and around helping leadership critical XXXX the business

priority leverage. next is managing Our

to range, well of We ample debt leverage down have a target a sheet very paying and strong currently position record with net below our Franklin track has our flexibility objectives. balance support

the cash sheet we're financial return where a each and that and strong shares its of long performance any showcases excess we XX health. the execution, increased last to dividends has looking to in shareholders Franklin dividend commitment a repurchases. opportunistically will consistent it balance history With company's repurchase be always cash, share accretive. to have Finally, through years.

submersible good see we select have we us this growing [indiscernible] this continuing. growth markets. as Moving municipal past Pump We infrastructure critical example to mining, a dewatering complementary we to year, of We markets a focus called on that to Edge -- and investments of XX. and in exposure number product-based wanted Access line a an see Slide with a to investments minerals, for recently OpEx our our company deal along namely purchased with industrial faster, in increases construction, recently give closed growth. product with seen

also service channels strong balance opportunity in markets beyond. newer sheet, some for we great a With a to see opportunities We product business. as and see acquisitions and XXXX

committed growth are we growth our long-term and exposure by has conclude, by areas attractive and Franklin The products leveraging supported to adding end about trends. footprint. To the global portfolio high-growth secular Electric. potential We're markets excited good incredibly capacity in of to

products We to markets have capture to the growth. ability further introduce and geographic additional

allocation supports endeavors, us arise. thoughtful and Our capital strategy they these strong to opportunities giving on the flexibility balance as value-add capitalize sheet

growth And for just we're not but finally, looking growth. profitable

the to with operational We operating efficiency system. driving are Franklin committed

As needed. productivity to accelerate this we've able when demonstrated we're year,

Franklin, key optimistic in to We industry-leading our execute and in future. strong about Between operational and will confident about and progress. continue products, our to and are our on innovative initiatives a excited XXXX our I'm there's execution, service at faster-growing be lot we verticals

our will concludes remarks, for prepared and This turn Andrew over call we the questions. to

Operator

line our the first from [Operator with comes Davidson. Instructions]. And D.A. of Summerville Matt question

Matt Summerville

questions. of couple A

more in guidance the little piece seeing embedded 'XX? ag both business can fourth the in not you residential what for sort expectation only of maybe your markets give of be a in your that might you're on business groundwater what but quarter, color First, overall the terms and for of in

Joseph Ruzynski

Matt. Thanks, Yes.

the for next year is expectation similar Our a year market probably going fairly XXXX. to to be is that

on think, gain ability we to we by customers anyone. our we that is share than and commented really think our grow, this, and our driven products but some serve get to as working better or well make sure I products and

market to see as biggest bigger market -- and -- the but as That we prices other have that part bit really from The clearly, up. think smaller some another business, us clear finish of of residential just replacement little standpoint, that year. we of to the challenges part always I good a there, groundwater little and a ag a to with an less bit is say outlook, it's side our our that this and is business.

as that year flattish we a did not getting from market, to to a continue the help XXXX. on build in but So we of ton

Jeffery Taylor

a just And Yes. more background. little

single X% and groundwater year-over-year groundwater to quarter resi Ag digits mid-single The the stronger digits low for whereas our fourth single-digit in and was between space. in growth year, closer a X% overall the water in was also business the full for little slower overall. Matt, up was low our So to resi business

And But ag in we've we do the forecast is and up stability so as that see -- slightly full challenges demand out, we and Joe that very business got see there stable, today. see pointed the for we'll side, year. results the some replacement on

Matt Summerville

if standpoint? terms I overall the be the what's charge And on thoughts in would restructuring level, fell from breakout just of didn't but then And could hear Jeff, that it. your just provide positioned would a tariff in anything where prepared how maybe Franklin Got be remarks, that segment an you helpful. at

Joseph Ruzynski

Yes.

I think -- good question, Matt.

we, most industrial pretty companies think I be. reaction our a dedicated to have like needs in team what

So is that team structured. well

some tariffs is, and understanding I with the escalate, -- pricing. footprint, the have ability pull where to manufacturing to that with all are in I chain to also and efficiency combination potential strong One hit. pricing. and a tariffs some from we But a through if opportunities of actions, them continue control Franklin some few of that think when product brand things. we really would redundancies a global accommodate of our has. It's of if supply that terms think There

exposure is next guess U.S., what weeks in take we'll happen Canada. else action. China that and to to the see some could and had we ready Mexico, months is account, that prepared included But bring. which I wait not the AOP Our into take and in significant. related exposure it There We're was for the to to what

Jeffery Taylor

regards Matt, does your question, of And that to part segments. get then our restructuring, down Right. to pushed in X

or well the hit in activities million $XXX,XXX restructuring there energy million cost didn't corporate that the about as Distribution about had in $X.X and restructuring. quarter. or $XXX,XXX had And the did improvement quarter. of million technically $X.X business, We have they in water our area in was about $X.X so

Operator

line comes next from Oppenheimer. Bryan our question of Blair And with the

Bryan Blair

like ask, Systems. a guess, renamed I'd question on to I level setting Energy

for You us remind newer [indiscernible]. grid or rates had margin monitoring relative of offer profiles revenue applications the mix about recent systems to growth and cited you also critical energy respective XX% of and being legacy of fueling Can decline asset the solutions. to

Joseph Ruzynski

quarters and some than of on momentum growth Yes. exited XXXX. asset some the last that were expect grid-related up and XXXX in critical we and year of we of the products, XXXX, as -- XXXX. year in monitoring we the first The That good slower saw a X picked the

definitely if But look grow. it, companies there XXXX in I really some think you we a there hard spot and robust pull utility softer be see XXXX. a business and continuing after at to of the you to that see was that and other

So major solutions think the of in we we customers, mentioned the addition that marketers. bring that, and offer, legacy some I to to the smarter I this

So the think of service and of you smart products there. if we offer some station that

other the asset some segment. business We or the have technology monitoring, sensing that of for monitoring that entire grid margins Energy and across Systems monitoring, the opportunity good. very that power to margins the are in leverage And the maintenance,

to I if know Jeff, don't wanted follow up on. you

Jeffery Taylor

had challenges No, backlogs couple obviously, XXXX if you a then in into last pent-up driven -- XXXX chain years, we XXXX -- of really look record year off supply at of the was until its had constraints XXXX, from in COVID year that business and has and every that to coming backlogs in have moving hopefully. business. pick year. those tough We're effectively normalized where to really we and going comps up in forward, pass stabilized quarter see now and the now demand tough start we And the this comps

Joseph Ruzynski

like comment across the from the other What some just happen power and a go-forward it across there, about we to of monitoring critical monitoring. the manual grid one that standpoint, is replaces Bryan, infrastructure. asset has that

here as it's important need automated for us So forward. solutions be going more as for gets to think great going labor a the become tighter more I area

Bryan Blair

the fit strategic of looking were product I that degree pretty more suppose, has. through the sense. the a as Barnes the to diversified and lineup beginning color All also there. makes with portfolio Barnes website. over would It hear It's I great [indiscernible] asset of about be the appreciate we

give Franklin on anticipated contribution. to valuation, just financial you're us I'm truly the So versus where deal the then metrics price curious have offerings? you P&L if incremental perhaps key And willing, overlapping what's technologies

Joseph Ruzynski

deals just that we and X on sense then for impact. I'll that a can today maybe just strategic overall comment about for the Jeff, give talked Yes, alignment

what in been surface where Barnes, For things, They've they've of pumps. commercial complete market. those for. They but attuned the we are commercial that really a and do. and products built number or are ready got have These to products of line terms -- of Latin application there's well other wastewater similar to America products products -- serve

think product I today. mentioned times. within few do company. us great ability presence that. around to But move do this region region that we opportunity we global comment a be versus world. to times We serve Barnes global the a I a at our scale ability mean that, efficient to are to is of gives and course, important. within

also foundry position us forward. fact as I trying sources, that can the a build integrated we that castings go find to think is cost companies their here vertically be Barnes upon to as get for that great self-reliant, we how to lower the think, with I is are and

Jeffery Taylor

definitive to And excited closed [indiscernible] these closed. really everyone with is have X but we just And Yes. to completed we a one acquisition signed stake acquisitions, remind the haven't -- yet. agreement, Barnes and the

that So prepared X Joe remarks. March around his in as or we expect March indicated early

approximately our $XX into million again of of approximately that's built revenue months So because revenue guidance they'll have year full us, range. built top or in on to line be and impact year. deals our is going once for months XX acquisitions X the prorated do for these The XX of impact we guidance the into the combined be

the We disclosed say price I our haven't What certainly is this quarter either there, purchase deals the individually. in in of will first reported be would filing.

range. effectively through expect $XXX that of the purchase will on in cash balance expect businesses X We price combined that finance sheet. would us, the for we be million to the the

any debt. adding not So new

of of the the be But accretion be be the expect to and EPS teens EBITDA $X.XX amortization high an businesses. perspective full On year the will will that basis, we margin range approximately the accounting EBITDA acquisition will balance certainly statement, to these sheet or it each X a to that income impact from for businesses percent There to get and the or margin. for XX-plus will for margin, valuation in us. added

acquisitions. background a the on that's So little

Operator

And from our question comes next Mike with Halloran line the Baird. of

Michael Halloran

composition just about in year? follow-up in are is? sequentials year? there's And or demand mild improvement out adjusting the that. What guidance? about or fundamentally is, thinking And seasonality FX me, you're the -- what relatively growth Could embedded trends thinking expectations A as excuse you sit to where for numbers then any of how round how the for the if here through stable you you then the from underlying today, work organic we

Jeffery Taylor

back on lot a Yes, there, Mike.

to So we'll try of can. hit as much that we as

continue me going. with the the at -- assumptions some guidance level start of effectively been to effectively that going way the obviously, finished And maybe XXXX through some Let we're will they've XXXX. way walking to think we start have. nature we And I it's things human

we the year. to moving similar first the typically business, seasonality the is QX, in and we the our lowest understand of So you although calendar saw quarter see know that into QX, you the what quarter quarters X in of

and full the year business. to mineral seasonality And see the profile of so we that expect

is half quarterly a little guidance. giving What first wider than would the not We're half. second say the I typically is

with half than I likely around think of out tariffs, rates, today, if interest second with hearing probably the on in to that least And areas. more be back to read that rates the you interest year level XX% and first inflation interest here the from based sit see rates, go we're Fed big yet appear economists. certain other some would and is as future flattish, of there today the how -- our But up or stable obviously, uncertainty as shapes factors. half half. X around But it's down, certain look the we seasonality historically, reasonably what go we at up conditions XX% economic in half in here on we sit first

Our view at into year. flat, least is the effectively this going

been Housing market challenged. has

both to But market move of depressed that pressure stay level, half into to going moderated some yet hold long at prepared team and expect tariffs of it's the going be. year. term. potential of be market and has housing the the situation year, is in short impact excluding what's tariffs housing XXXX. those going first the in and Inflation moving whatever improve Joe as has has is that We well commented in as as term, on, or like we're some tariffs, somewhat to We it. to our comes through into determined the how the term part certainly, the manage long back the of feel on impact we are term to going the market already through housing to the short for

Joseph Ruzynski

add? Jeff, I can

Jeffery Taylor

Yes, yes.

Joseph Ruzynski

Yes. just couple a of Mike, thoughts. maybe

-- optimism I think and XXXX. some we're of excitement we see our for you -- obviously,

I first up, up a to of flatter slightly half starts the little momentum think the picking through year. some the year

and trends for mentioned order I changed what's think I us are is positive, confidence, gives what book-to-bill positive. us some

these I that focusing we year, we in return. that where think X, months us in key the should lot should just last we the spent of organization, make a that the focus investments get really give X where of and focus of on time last will

starting market readout. dictate So think I letting sitting to and the our that progress we're we're not And here. back see

commentary to added little a comments Jeff's there. just So

Jeffery Taylor

FX A here Yes. close a headwind. quick comments out. really just to of couple be will

in capture and is year-over-year 'XX million line X% to X% didn't get materially the top We of basis costs in of On fleet view the organic And on we to comment range digits, improvements business sales. organic in mid-single some We EPS, to expect The throughout $XX an as the that's impact productivity $XX overall. operating that points the mid-point, year-over-year business. we right growth see is We was the X.X in to to our year and then about X% be to really million. acquisitions. down a now flat on do in is to effectively fleet expect low -- managing leverage basis. of That's XXXX. our XXXX. X% X% a basis, on Currently, going business

Michael Halloran

Really there. appreciate color was a of There lot it. Great.

farther willing internally, you think thinking are prepared the is about aperture there and interesting a that are centricity of others, on basis focus near and And more side, M&A areas the are you than product you the fit an heard announced, afield? think equal? guys remarks, a on are and on you to if maybe go when So just wide How adjacencies, congrats you everything. forward and all the little X I

Joseph Ruzynski

Yes. good It's question. a

at regions. I exposure to that have some the think benefits in adjacencies, we some adjacencies when look have those capacity Franklin here in one we at of is we

to So markets. instance, that in can focus, municipal think opportunities, for or our really industrial, attention see or move we I add wastewater can we those where we other

exposure, think I aperture not something that going experience and we're from market we an have no into no So awareness. standpoint, no

of is for we some But last growing, others the our see OpEx serving business which regions year, growth access markets to acquisition but in also North bringing that the portfolio. mining reasons because Africa in and and instance, and of not places tremendous America talked visibility. have within channel Australia mining and have and in only ready markets is some saw here introducing add had new in that one to the where we strong We we product of Australia. confidence where about like industrial to have we that South

work industrial lot some say commercial do of near that we exposure good So got to we've adjacencies would today. in in a I other have to wastewater, applications.

could but allocation. and it's further capital well little a be an that think some near focusing the that, term, push there longer us from known to So think effort fairly things is us, I term I of

Operator

Walter the comes of question with Global. line next our Liptak And from Seaport

Walter Liptak

sure a transformational opening to deal? like at you're the as adjacencies Were deals. your size remarks looks you of to discussion. that M&A want Just that the alluding with during about bolt-on Can it and continuing make looking the talk M&A understanding anything smaller to just follow-on I that? you

Joseph Ruzynski

Yes.

and think the X was we're years, amount a ready for for market make I alluding bit deal a market we that those the is transformational. bolt-on opportunities sure And tremendous And to right we've to strategy that high. work got more then the that and something make the X opportunity we're last we're go. I that to larger the frothy a that see for valuations of understand prepare well, lot there what we're to that something We that's wasn't think that that's strategic ready of sure to and and us making changing, than of we've or were to sure or want for traditional for. ready had just

in yes, So that we're correctly heard you And it. to open our comments.

Walter Liptak

Okay. Great. you And ratio sort going what a -- is of that about up to? think what so max or debt size would a

Joseph Ruzynski

you a mean, I we exit what fact an max balance I that would look strong would as last if think we you it's sheet tell this, the have at But size to I hard be. year. is incredibly what say

So really...

Jeffery Taylor

mean have of But $X that. sheet, on given any of acquisitions deal. on optionality the opportunity have current more -- mean, the you gives It balance low presents depends balance if transactions of we specifics We've a said it our go depending our the that the deal we we've and available to I on Yes. flexibility with I in obviously, evaluate itself. could capacity beyond leverage like about past, for had us and just very lot right strategic sheet. ability the billion

I But us leverage covenants perspective, at from our limits debt a X.Xx. mean,

not sheet, down will think, the want back very opportunity And debt balance get at But quickly. for Xx, some to to and be [ something At we itself to to pretty comfortable aggressive presents think, business. a manageable I Xx, right is to, certainly, that's we're balance leverage happens. being plan ] uncomfortable we'll And sheet X.Xx. would if what debt we pay the have We X.Xx. the see the and add

Walter Liptak

operating done, thinking idea about you productivity that as you've the Okay. Great. just a improvement Do And the at and is and in do follow-on, have leverage XXXX. then other restructuring the that I an benefit the maybe color. appreciate volume this did, and from the that much what XXXX? point, how from restructuring you of your in things leverage you productivity get

Jeffery Taylor

Yes.

of -- activities. think, We're improvement. margin, a from I but got [indiscernible]. factors it's XX a There's points basis operating XX control, XX cost come business restructuring between obviously, our think diverse that we've somewhere certainly into and to impacting of lot I going see to

Joseph Ruzynski

I thing just Well, add one Jeff's to comments. would

And got of have. capacity to our some next slightly invest productivity intent Our capital that year in and those we is -- is for larger than historically growth. invest we've plan efforts a

to do an not last year be expect going dividends. efforts it's to clean So pay but we exact the readout, of

We also where deploy have in to some of terms ideas that good money focus. and our

Walter Liptak

is? Great. CapEx -- Did Okay. you expect the what do much say What spend in you to XXXX. the how

Jeffery Taylor

Historically, X% sales, Walt. of it's been about

$XX billion been it's $XXmillion $X a at past this there's So $XX-plus million, year. million, company,

that than it to X.X% of year, be and will will it higher think I be this closer sales.

Operator

I would CEO, to for any over the to hand closing now call like back remarks. Joe Ruzynski

Joseph Ruzynski

Thank conversation. thanks, and look questions day. appreciate and to We're you, excited in here to interest We Electric. a about we Franklin and in Have everyone, call the the appreciate great forward We our the talking you all XXXX, for the joining next today. quarter.

Operator

today's Ladies and gentlemen, thank for does you This and disconnect. participating. you conclude may now program,

Franklin Electric (FELE) 18 Feb 252024 Q4 Earnings call transcript