Quantitative details on the 3 acquisitions and color on order trends, backlog, and book-to-bill.

Three deals: Geoquit (UK water systems, smaller), Wood Brothers (US water treatment, mid-$20s to low-$30s revenue), and Benson (US distribution, mid-$20s revenue). All are tracking ahead of plan. Inventory position is healthy, with sell-in and sell-out aligned, and strong order growth and healthy backlog. “The final 1 is -- it's a company called Benson. And Benson is a great distributor kind of in that same space, right, in the middle of the U.S., but they expose us to markets that historically they reached down to the Gulf Coast, they serve a nice ag space they touch utility or a municipal in the infrastructure space really well.”

What is driving the 12% increase in ag sales despite broader headwinds?

Attributed to pent-up demand after underinvestment, favorable weather conditions (El Nino, drought), high replacement business (75%+), and strong service/inventory availability. “I think 1 is ags been a bit underinvested over the last year or so, just as you've seen some of the volatility and the pressure from a commodity standpoint. So there's probably a little pent-up demand that we're able to serve there.”

Will the strength seen in Australia mining dewatering spread to other key geographies?

Yes, the company sees a funnel of opportunity in South America, Africa, Europe (specifically the 'stans'), in addition to Australia. The focus is on expanding existing mines and maintenance/dewatering, aligning with the 6-7x increase in critical minerals needed over the next 10 years. “At the end of the day, critical minerals are the needs and you can kind of do your own market double check here, but 6 to 7x the critical minerals needed in the next 10 years. there's just really no other way to do that.”

FELE

Franklin Electric (FELE) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Jul 28, 2026

Source: earnings call transcript

Executive summary

Franklin Electric Q2 FY26 — Strong Growth and Raised Full-Year Outlook

Franklin Electric delivered a solid second quarter, driven by strong organic growth, new product contributions, and effective cost management, leading to record adjusted EPS and an expanded operating margin. The company raised its full-year sales and adjusted EPS guidance, reflecting confidence in its strategic execution despite ongoing macroeconomic and geopolitical uncertainties in certain global markets.

Highlights

Consolidated revenue grew over 6% year-over-year, with 3.5% organic growth.
Adjusted diluted EPS increased 18% year-over-year to a record $1.55.
Adjusted operating income was up 12% year-over-year, with margin expanding 80 basis points to 15.8%.
New product sales contributed over $10 million in Q2, and new water treatment dealers added over $2 million in revenue.
Full-year sales guidance raised to $2.21 billion-$2.29 billion and adjusted diluted EPS guidance raised to $4.50-$4.70.

Concerns

A $4.5 million provision was booked for a legal settlement in the Energy Systems segment.
Restructuring costs of $400,000 were incurred in Q2 2026, primarily in the Water segment.
Acceleration of inflation and softer regions in Europe and South America were noted as headwinds.
EMEA sales volumes in North Africa, Middle East, and Eastern Europe were negatively impacted by ongoing conflict.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year sales	$2.21 billion to $2.29 billion high materiality	FY26	High
Full-year adjusted diluted EPS	$4.50 to $4.70 high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Global Water Systems Operating income was $65.2 million, up $3.4 million. Adjusted operating income was $65.6 million, up $3.7 million or 6%, with an adjusted operating income margin of 18.3%, an improvement of 10 basis points from prior year. Operating margin was positively impacted by favorable price realization and somewhat offset by higher material costs. Restructuring costs of $400,000 were incurred. U.S. and Canada sales: up 8%Agricultural market sales: up 12%Residential products sales: up 11%Mineral extraction sales: up 6%Large dewatering equipment sales: decreased 12%Outside U.S. and Canada sales: increased 1%Foreign currency translation impact on sales: 5% increaseRecent acquisitions impact on sales: roughly 1% increaseVolume price impact on sales (outside U.S./Canada): newly impacted by 5%	up 5%	—	—	18.2%
Distribution Sales increase was primarily due to higher volumes, acquisition-related sales and price realization. Operating income was $19.7 million, a year-over-year increase of $3.6 million. Operating income margin improved by 80 basis points versus the prior year.	$221.1 million	11% increase	—	8.9%
Energy Systems Operating income was down $1.2 million. Adjusted operating income was $32.4 million, up $3.3 million or 11%, with an adjusted operating income margin of 40.4%, up 290 basis points from prior year. Adjusted operating income increased primarily due to favorable price, organic volume growth and refunds associated with IPA tariffs. A $4.5 million legal settlement provision was booked. U.S. and Canada sales: increased 1%Outside U.S. and Canada sales: increased 12% (primarily Europe and Africa)	$80.2 million	3% increase	—	27.9 million

Orderbook & backlog

Total Backlog healthy Q2 end

strong order growth

Deals & partnerships

Geoquit (UK) Water Systems business focused on groundwater and residential space in Europe (UK).

Closed just before Q1 exit. Focus on government investment and integrating solutions for builders and drillers.

Wood Brothers (US) Water treatment business, extending reach in the center of the U.S. mid-20s, low 30s revenue

Closed just before Q1 exit. Helps extend reach in a part of the U.S. historically underserved, serving as a platform for smaller dealers.

Benson (US) Distribution business, exposing to Gulf Coast, ag space, utility/municipal infrastructure. mid-20s type revenue business

Closed as entered Q2. Known for a while, brings new market exposure and pull-through for Franklin products.

Capital programs

New factory in Turkey underway

Benefit:efficient operating structure

Ramping up a new factory in Turkey to build an efficient operating structure to better serve customers long term.

Facility consolidations in North America underway

Benefit:efficient operating structure; nice productivity boost

Working through facility consolidations in North America to build an efficient operating structure and expect a nice productivity boost from these efforts as we move into 2027.

Risks & headwinds

Inflation Q2 and back half

acceleration of inflation throughout the quarter; some softer regions in Europe and South America

Mitigation:continue to watch for pricing and productivity measures to offset as we move to the back half

Geopolitical Conflict ongoing

EMEA sales volumes, specifically in North Africa, Middle East and Eastern Europe were negatively impacted

Mitigation:replacement business, we're still able to sell

Tariff Announcements back half

last week another tariff announcement

Mitigation:modeled some balance in pricing and the offset to these same tariffs included in our inventory

South American Market Slowdown back half

slower year than we expected in South America; political change and pause on support to farmers

Mitigation:modeled in

What to watch in Q3 FY26

Productivity boost from facility consolidations

2027

Current Costs included in Q2, ramping up a new factory in Turkey and working through some facility consolidations in North America

Target nice productivity boost

Why it matters

Operational efficiency and margin expansion are key strategic priorities.

We are ramping up a new factory in Turkey and working through some facility consolidations in North America to build an efficient operating structure to better serve customers long term. Some of these costs are included in our overs, both in restructuring and operating expense, and we expect a nice productivity boost from these efforts as we move into 2027.

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Q&A highlights

How large are these exposures, what specific products are involved, and any specific data center wins?

Critical minerals is a multi-billion dollar TAM, with sales up high teens in Q1 and 10% in Q2, focused on dewatering and maintenance in mines. Data centers involve municipal hookups, flushing applications, and supporting CDU manufacturers, with no specific wins to call out yet but strong positioning.

“For critical minerals, obviously, energy infrastructure, the need for more electricity, data centers, et cetera, that critical mineral space for us, we think, is a multibillion dollar TAM that we're trying to make sure that we can both position ourselves to serve but also have the products to meet that need.”

asked by Matt Summerville · answered by Joseph Ruzynski

2 min read 6 chapters

Detailed narrative

Strategic Growth Initiatives

Franklin Electric's Q2 FY26 results were bolstered by a focused strategy on growth, with new products contributing over $10 million in sales and new water treatment dealers adding over $2 million in revenue. The company emphasizes expanding into faster-growing markets and channels, supported by investments in R&D and strategic M&A.

This approach aims to increase velocity and scale, delivering solutions that anticipate customer needs and accelerate overall growth.

Margin Expansion and Productivity

Adjusted operating income increased 12% and adjusted operating margin expanded 80 basis points to 15.8%, driven by volume growth, price discipline, and cost management. The company is ramping up a new factory in Turkey and consolidating facilities in North America, expecting productivity boosts in 2027.

A new Chief Supply Chain and Transformation Officer has been appointed to lead these efforts, focusing on building efficient supply chain networks and transformation execution.

Balance Sheet and Capital Deployment

The company maintains a strong balance sheet with $97.3 million in cash and generated $58.7 million in net cash flows from operating activities in H1 FY26, up from $32 million in H1 FY25. Capital deployment remains disciplined, with a record capital budget for the year balanced between growth, productivity, and sustaining projects, alongside continued dividend growth.

The commitment to shareholders remains a key tenet of the company's strategy.

Water Systems Segment Spotlight

The Water Systems segment, a $1.3 billion business, was highlighted as central to Franklin's identity, focusing on products that supply, move, treat, and dewater. The strategy aligns with powerful megatrends like a rising middle class, increased residential construction, accelerating urbanization, and the expanding need for critical minerals. Innovation, world-class water labs, and deep engineering expertise are central to designing solutions that anticipate customer needs.

Critical Minerals and Data Center Exposure

The company is actively positioning itself in the critical minerals market, which saw high-teens growth in Q1 and 10% growth in Q2, focusing on dewatering and maintenance for mine operations. This market is viewed as a multi-billion dollar TAM with a high single-digit CAGR.

In data centers, Franklin Electric serves various elements of the cooling loop, from municipal hookups to flushing applications and supporting CDU manufacturers, with plans for increased specificity in the back half of the year.

Acquisition Strategy and Channel Health

Franklin Electric closed three deals in H1 FY26: Geoquit (UK water systems), Wood Brothers (US water treatment), and Benson (US distribution), all tracking ahead of plan. These acquisitions extend market reach, integrate solutions, and facilitate the pull-through of Franklin products. The company also noted a healthy and balanced inventory position in its channel, with sell-in and sell-out aligned, indicating strong underlying demand.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.