Franklin Electric (NASDAQ:FELE) executives said the company delivered record full-year revenue and segment operating income in 2025, citing volume growth, strong price realization, and productivity gains despite tariff-related cost pressures. Management also issued 2026 guidance calling for continued sales and earnings growth, supported by a “healthy” order book and backlog entering the new year.
2025 performance and key themes
Chief Executive Officer Joe Ruzynski said full-year sales increased 5.4% and segment operating income rose 9.6%, which he described as “high points” for the company in both revenue and segment operating income. In the fourth quarter, sales rose 4.4% and operating income increased 9.2%.
Beyond the reported figures, management emphasized initiatives aimed at accelerating growth and improving margins. Ruzynski said the company added more than 35 products in 2025 that are expected to deliver over $160 million in revenue by year three. He also pointed to progress in water treatment and distribution, and the launch of a “value acceleration office” that uses 80/20, AI, and process engineering to streamline the portfolio and internal systems.
Quarterly and full-year financial results
Chief Financial Officer Jennifer Wolfenbarger reported full-year 2025 fully diluted EPS of $3.22, down from $3.86 in 2024. She said the result was negatively impacted by a $41.5 million pension settlement charge net of tax benefit, or $0.91 per share, and $0.01 of restructuring charges. On an adjusted basis, diluted EPS was $4.14 in 2025 versus $3.92 in 2024, an increase of 6%.
For the fourth quarter, consolidated sales were $506.9 million, up 4.4% year over year, driven by acquisition-related sales and favorable price. Gross profit was $171.5 million, with gross margin holding steady at 33.8% as the company offset higher tariff costs with additional pricing and volume growth in energy and distribution. Operating income rose to $51.6 million from $43.0 million, and operating margin improved to 10.2% from 8.9%, which Wolfenbarger attributed to price, productivity, and SG&A cost management.
For the full year, Franklin Electric posted sales of $2.1 billion, up 5.4%, driven by favorable price, organic volume growth in energy and distribution, and incremental sales from acquisitions. Gross profit increased to $755.9 million, while gross margin was unchanged at 35.5% as pricing and productivity savings offset tariffs. Full-year operating income increased 10% to $269.0 million, and operating margin expanded 50 basis points to 12.6%.
Segment results: water, energy, and distribution
Global Water Systems: Fourth-quarter sales increased 4.3%, driven by price and acquisition volume. Wolfenbarger said U.S. and Canada sales declined 4% due to softer HVAC markets late in the quarter, while sales outside the U.S. and Canada rose 15%. Fourth-quarter operating income rose 17% to $41.8 million, and operating margin improved to 14.3% from 12.7%.
For the year, Global Water Systems sales rose 6%, supported by price and two acquisitions completed in early 2025. Wolfenbarger said U.S. and Canada sales increased 3% and markets outside the region rose 10%. Full-year operating income increased 5.2% to $207.2 million, while operating margin dipped 20 basis points to 16.5% due to acquisition-related costs.
Energy Systems: Fourth-quarter sales rose 9% to $74.7 million, with growth in both North America and international markets. However, operating income declined to $22.6 million from $24.7 million, and operating margin fell 560 basis points to 30.3%, which management attributed to an unfavorable geographic mix and tariffs. For the full year, sales rose 9% to $299 million and operating income increased 6% to $99 million, but operating margin declined 110 basis points to 33.1% due to geographic mix, growth investments in SG&A for new products and markets, and tariffs.
Distribution: Fourth-quarter sales increased 3% to $161.6 million, while operating income rose to $5.3 million from $0.5 million and operating margin improved to 3.3% from 0.3%. Full-year sales increased 2% to $700.7 million, and operating income surged 64% to $39.8 million. Management said full-year operating margin expanded 210 basis points to 5.7% on margin enhancement initiatives and structural improvements.
Capital allocation and shareholder returns
Wolfenbarger said the company ended 2025 with $99.7 million of cash and $30 million outstanding under its revolving credit agreement. Operating cash flow was $239 million in 2025, compared with $261 million in 2024.
During the fourth quarter, Franklin Electric repurchased about 350,000 shares for roughly $34.3 million. At quarter-end, remaining authorization was approximately 0.8 million shares. The company also declared a quarterly dividend of $0.28 per share payable Feb. 19 to shareholders of record Feb. 5, a 5.7% increase from the prior quarterly dividend. Wolfenbarger said the payment would mark the company’s 34th consecutive year of dividend increases.
2026 outlook: sales growth and margin expansion expected
For 2026, Wolfenbarger said Franklin Electric will provide guidance on adjusted EPS rather than GAAP EPS. The company guided to full-year 2026 sales of $2.17 billion to $2.24 billion and adjusted EPS of $4.40 to $4.60, implying midpoint sales growth of just over 3% and midpoint EPS growth of about 9%.
In the Q&A, management provided additional detail on segment assumptions embedded in the outlook. Ruzynski said water growth is expected in the 3% to 5% range (including some acquisition carryover), energy growth “over 3-ish%,” and distribution growth of about 3% to 4%, with a similar price/volume mix to 2025. He also said the company implemented standard price increases early in the year and took additional pricing in energy to recoup tariff exposure.
On end markets, executives said a late-2025 HVAC-related softness in U.S. water systems appeared “isolated to the back end of Q4” and looked to be normalizing in January. Ruzynski said Mexico had been another soft spot in water, but that market also appeared to have stabilized. He added that the company had not assumed a housing recovery in its outlook.
Regarding profitability, Wolfenbarger said the company expects margin expansion across all three segments in 2026, including energy, where management expects margins to improve modestly and move back toward the “mid-thirty” range as pricing catches up after a timing lag in late 2025. She said distribution remains a focus after its 2025 step-up, and indicated expectation for another 70-plus basis points of expansion in distribution margins, with water and energy improving somewhat less than that.
Ruzynski closed by reiterating that 2025 was a strong year and said the company’s outlook for 2026 is positive as it builds on “transformation, innovation, and growth.”
About Franklin Electric (NASDAQ:FELE)
Franklin Electric Co, Inc is a world?leading manufacturer and distributor of systems and components for moving and managing water and fuel. Headquartered in Fort Wayne, Indiana, the company specializes in designing engineered pumping systems and related controls for residential, commercial and industrial applications.
Founded in 1944, Franklin Electric has built its reputation on submersible and surface pumping solutions for water wells, municipal water and wastewater treatment, irrigation and industrial fluid handling.
