The following is a summary of the Franklin Electric Co., Inc. (FELE) Q1 2024 Earnings Call Transcript:

Financial Performance:

• Franklin's Q1 2024 revenue reduced by 5% to $24 million, lower than Q1 2023. However, gross margin improved due to product mix and cost control. The diluted EPS came out at $0.70 compared to earlier $0.79.

• The Water Systems and Fueling Systems sales and operating income declined 7% and 15%, and 4% and 10% respectively, compared to the previous year.

• Sales in their Distribution business increased by 3%, mainly due to their 2023 acquisition. This helped them to normalise inventory levels and improve cash flow by $10 million.

• Despite a decline in their sales, they are sticking to their 2024 sales and EPS guidance of $2.1 -$2.17 billion and $4.22 -$4.40 respectively.

Business Progress:

• Franklin continues to focus on working capital, resulting in normalized inventory levels.

• They plan to explore growth through acquisitions, especially focusing on the manufacturing sector and companies with larger pumps to solidify their leadership in residential and agricultural sectors.

• They experienced a decline in their U.S and Canadian markets by 50% while witnessing a 10% growth outside these markets. This resulted in a global decline of about 40%.

• They expect a mid-teen decline in 2024 following their global record sales of $200 million in 2023 but are hopeful for a seasonal pickup in their business in Q2.

More details: Franklin Electric IR

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