Franklin Electric Co., Inc.

Hello and welcome to the Franklin Electric Reports second quarter 2025 sales and earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand has been raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Chief Financial Officer Jennifer Wolfenbarger.

Thank you, Andrew, and welcome everyone to Franklin Electric's second quarter 2025 earnings conference call. Joining me today is Joe Rosinski, our Chief Executive Officer, and for Q&A section, Russ Flieger, our Water Systems CFO. On today's call, Joe will review our second quarter business highlights, and then I will provide additional details on our financial performance, and Joe will make some additional comments related to our key growth and value drivers, along with our outlook. We'll then take questions. Before we begin, let me remind you that as we conduct this call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties many of which could cause actual results to differ materially from such forward-looking statements. A discussion of these factors may be found in the company's annual report on Form 10-K and today's earnings release. All forward-looking statements made during this call are based on information currently available and, except as required by law, the company assumes no obligation to update any forward-looking statements. Earlier today, we published a slide deck to accompany our prepared remarks. The slides can be found in the investor relations section of our corporate website at www.franklin-electric.com. With that, I will now turn the call over to Joe. Joe?

Thank you, Jennifer, and good morning, everyone. Thank you for joining today's call. Let me start our call today by highlighting our team's strong results in the second quarter on slide three. It reflects our adaptability, commitment to our employees and customers, and strategic execution. As I finished my first year as CEO and have seen the great work that our Priceline team is doing to serve, innovate, and grow, I'm proud of the progress we've made and how we've responded to change in a challenging external environment. All three segments saw organic growth with a good mix of price and volume. Overall, we've set new high marks for revenue, income, and earnings per share. We delivered a sales record in our water and distribution segments and record operating income in our energy segment. Overall, end market demand is mixed globally and has remained relatively stable. We continue to see encouraging order trends as we exit the quarter, and our healthy backlog gives us confidence in our ability to sustain this momentum as we move forward. Weather conditions were largely neutral overall. Existing home sales and housing starts remain soft, but our ability to add new customers, deliver the best service in our industry, and bring new products to market have helped us find good paths to enable growth. Importantly, our pricing actions have been successful, helping us protect margins during the recent tariff-driven volatility in the market. Our strong top line results and operational execution helped offset some of our hyperinflationary regional markets and several one-time costs, mostly expenses related to recent acquisitions, which are integrating well. We also continue to execute our long-term strategy, focusing on faster-growing markets, capitalizing on our healthy balance sheet, driving efficiency in our global operation, and building processes and teams while continuing to deliver great service to our customers. While the global markets remain uncertain in the face of tariffs and commodity inflation, we've been disciplined in our plans and response and are poised to execute in the second half. Moving to page four, I'd like to take a moment to touch on the incredible team and culture we're building here at Franklin. Culture has been a strength of Franklin in our storied history, and we're excited to build on this strong foundation. One of our key tenants is being a great place to work and attracting the best talent. With that, I'm excited to welcome Jennifer Wolfenbarger as our new CFO. Jennifer joins us with extensive financial leadership experience in global operations, most recently serving as Chief Financial Officer for the insulation business at Owens Corning. She brings deep expertise in financial planning and analysis, accounting, operational finance, and strategic business partnerships. And she has led finance teams supporting complex global businesses. We're confident that her strong leadership and her global perspective will be a tremendous asset to Franklin Electric as we continue to execute our growth strategy. I would also like to extend my sincere thanks to Russ Lieger for stepping in as interim CFO over the past several months. Russ will return to his role as a water system segment CFO, where his leadership continues to drive meaningful impact. Additionally, I'm thrilled to welcome Daniella Williams as our new Chief Human Resources Officer. Daniela's deep expertise in HR technology, talent development, analytics, and global workforce strategy will be instrumental in ensuring that we're well positioned to support our employees and customers well into the future. Thank you to our global Franklin team and welcome to our new leaders. Turning to results on slide five. Overall, we delivered strong consolidated sales growth of 8% with growth across all segments. While gross margin was down slightly, consolidated operating margins reached 15%, driven by strong execution and improved SG&A in our energy and distribution segments. Despite the continued macro uncertainty related to tariffs and several one-time acquisition-related costs in the quarter, I'm impressed with our team's response and our ability to drive growth in this environment. Looking at our segment results in more detail, Water systems delivered a solid sales result of 8% year-over-year, benefiting from favorable pricing, volume, and recent acquisitions. Similar to last quarter, the groundwater market remained steady, where we captured strong price realization in the U.S. We've lacked the difficult comparable period in our U.S. fleet business, and the business exhibited strong growth in the second quarter. The segment did, however, see a drag on margins as a result of mix stemming from sales related to large dewatering products and the recent acquisition-related costs. Energy delivered 6% sales growth, driven by favorable volume and price as international markets and our grid business picked up steam. As we look toward the second half of the year, we're excited about upcoming projects in places like India and Saudi Arabia. The segment also had strong operating income and operating income margin, with margins improving by 200 basis points. While margins have expanded materially in recent quarters, we expect to remain comfortably around this range in the near term. We're optimistic about our grid and asset monitoring business as it's rebounded nicely and is benefiting from expanded channels and new customer acquisition. Distribution also delivered a strong quarter with record sales Despite some negative impacts of storms and another wet year, the segment recorded 5% growth driven largely by higher volumes. Operating margins improved by 300 basis points, supported by strong operational execution, an improved pricing environment, and the stabilization of commodity prices. This is an encouraging trend for this business. I'm now going to hand the call over to Jennifer to review our financials in more detail.

Thank you, Joe. Our fully diluted earnings per share were $1.31 for the second quarter 2025 versus $1.26 for the second quarter 2025, up $0.06 from the prior year. Moving to slide six, second quarter 2025 consolidated sales were $587.4 million, a year-over-year increase of 8%. The sales increase in the second quarter was due to the incremental sales impact from recent acquisitions and higher volume and price in all three segments, partially offset by the negative impact of foreign currency translation, primarily due to the Brazilian real. Franklin Electric's consolidated gross profit was $211.8 million for the second quarter 2025, up from the prior year's gross profit of $199.8 million. The gross profit as a percentage of net sales was 36.1% in the second quarter of 2025, a decrease of 70 basis points compared to the prior year. Moving on to SG&A expense, we've seen 120 basis point improvement in our SG&A as a percent of sales metric for the year over year as a result of cost improvement actions taken in the last year. SG&A expenses were $123.5 million in the second quarter of 2025, compared to $120.6 million in the prior year. The increase in SG&A expense was primarily due to the additional expense impact of our 2025 acquisitions, including various deal-related costs. Absent acquisition-related SG&A, the company experienced a decrease in SG&A expense year-over-year of approximately $2.3 million as a result of actions taken in Q4 of 2024. Consolidated operating income was $88.1 million in the quarter, up $9 million, or 11%, from $79.1 million in the prior year. The increase in operating income was primarily due to higher sales and cost management. Operating income margin was 15%, up from 14.6% year-over-year. Moving to segment results on slide seven, water system sales in the U.S. and Canada were up 5% compared to the second quarter of 2024. At a product level, sales of large dewatering equipment increased 20%. Sales of water treatment products increased 7%, driven by the strong addition of dealers to our customer base. And sales of all other surface pumping equipment increased 2%. while sales of groundwater pumping equipment decreased 4% as compared to Q2 2024. Water system sales in markets outside the US and Canada increased 12% overall. Foreign currency translation decreased sales by 1%, and recent acquisitions added roughly 11% to sales. Excluding the impact of acquisitions and foreign currency translation, sales in the second quarter of 2025 increased high single digits in Asia Pacific, low single digits in Latin America, and were relatively flat in EMEA. Water systems operating income was $61.8 million, down a half a million versus the prior year. The decrease was primarily due to lower gross margin and higher SG&A costs, primarily related to our recent acquisitions, Sales mixed impact due to higher large dewatering sales in the quarter, as well as negative impact of foreign exchange partially offset by better volume and price. Operating income margin was 18.1%, a year-over-year decrease of 160 basis points. Distribution second quarter sales were $200 million versus second quarter 2024 sales of $190.5 million, an increase of 5%. The distribution segment sales increase was primarily due to higher volumes as a result of share gain and onsite inventory placement projects. The distribution segment's operating income was $16.1 million for the second quarter, a year-over-year increase of $6.3 million. Operating income margin was 8.1% of sales in the second quarter, an improvement of 300 basis points versus the prior year, driven by higher volumes and improved margins as a result of margin improvement actions taken in the last year. Energy system sales were $77.5 million, an increase of $4.4 million, or 6% compared to second quarter of 2024. Energy system sales in the U.S. and Canada increased 6% year over year. Outside the U.S. and Canada, energy system sales increased 14%, led by increased sales in India and strong grid growth. Energy systems operating income was $29.1 million compared to $26 million in 2024. Operating income margin was 37.5% compared to 35.6% in the prior year. an improvement of 190 basis points. Operating income margin increased primarily due to the favorable geographic mix of sales, as well as price realization and the benefit of cost management actions taken in the last year. The effective tax rate was 25% for the quarter compared to 23% in the prior year quarter. The change in the effective tax rate was driven by an increase in foreign earnings, tax rates higher than U.S. rates, as well as less favorable discrete items, which had an EPS impact of approximately three cents. Moving to the balance sheet and cash flows on slide eight, the company ended the second quarter of 2025 with a cash balance of $104.6 million and with 186 million outstanding under its revolving credit agreement. We generated $52 million in net cash flows from our operating activities during the second quarter compared to $36 million in 2024. In Q2, the company purchased a total of roughly 1.4 million shares of its common stock for approximately $120 million. Approximately 1.2 million of these shares were purchased from the past Shaper Trust for roughly $104 million. As of the end of the second quarter of 2025, the remaining authorized shares that may be repurchased is about 1.1 million shares. Yesterday, the company announced a quarterly cash dividend of 26.5 cents. This dividend will be payable August 21st to shareholders of record on August 7th. Moving to slide nine. We are holding our full year sales expectations of 2.09 billion to 2.15 billion and maintaining our GAAP EPS range of $3.95 per share to $4.25 per share. During the third quarter, the company expects to terminate its U.S. pension, which will have a non-cash EPS impact of approximately $1 per share. This impact is not included in our current guidance. While we remain confident in our backlog and our ability to execute, we foresee opportunity in the second half of 2025 to accelerate further investment in the optimization of our supply chain, execute select restructuring, and invest in growth. Therefore, we are maintaining our previous guide. Now I will turn the call back to Joe for some additional comments.

Joe? Thanks, Jennifer. Turning to slide 10 to bring back our value creation framework, our long-term strategy is anchored in how we drive growth, execute and transform operationally, deploy capital, and maintain industry-leading talent. To drive growth, we continue to focus on innovation, global portfolio expansion, and strengthening our leadership position across key markets. We have focused on synergies as we've grown acquisitively these past years, supporting our ongoing operational efficiency efforts and driving improved standardization across our business. Our recent acquisitions are performing well, and the Collective Franklin team is energized by new opportunities from these investments. At the same time, we're also deeply committed to returning capital to shareholders, as evidenced by our completion of over $100 million in share buybacks this quarter. Finally, we continue to attract top talent, as seen with the additions of Jennifer and Daniela to the team, among many others, all of whom will help support our ambitious growth agenda. Ultimately, we believe these priorities position us to deliver consistent long-term shareholder value. On slide 11, I'd like to give a quick highlight on innovation. An excellent example of our drive to listen to market and our customers' needs then bring leading innovation and solutions to our end markets is our new EVO1 fuel monitoring solution. Tens of thousands of convenience store owners now face a major cost and operational challenge. They rely on outdated fuel monitoring systems that utilize 30 plus year old technology. Upgrading just the control console leaves most of the aging components in place. This means owners are likely to face future unanticipated downtime coming at a dramatically higher cost as the rest of the system components reach the end of their service life. With EVO 1, Franklin has provided an ideal path to upgrade the entire monitoring system utilizing the latest EVO technology perfected for the world's leading convenience store companies at a price comparable to replacing just the traditional console. We will now turn the call over to Andrew for questions After Q&A, we'll return for closing remarks. Andrew?

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. And our first question comes from the line of Brian Blair with Oppenheimer.

Thank you. Solid quarter. Thank you. Thanks, Brian. So level set, did Q2 benefit from pull forward orders, at least any notable degree? I know that wasn't the case in Q1.

Really no change in terms of kind of our traditional order pattern. So at the end of Q2, I would say it was business as usual, really no significant pull forward from Q3 to Q2.

Okay, that's good to hear. And it was great to see distribution margin back in Q2. you know, kind of high single-digit territory. How much did cost actions contribute to the 300 basis points margin expansion? And given current visibility, how is your team thinking about distribution profitability through the back end?

Yeah, you know, I think as we started the year, you know, we said our expectation is you're going to see the most margin improvement in that segment. And, you know, it's reading out as we expected. Cost actions contributed probably, you know, a third or a little bit more of that benefit. But I think what we're excited about is, and I mentioned this in my prepared remarks, following years of acquisition, we're really proud of how that team is bringing that distribution network together, focused on operational efficiency, both inbound, how we purchase, how we serve customers, and then building really a strong technology base to be able to give good real-time visibility how customers order, how they can see our products. So it's a number of things, but I would say some leverage, some of that operational execution and efficiency just based on really building a more efficient business. And then of course, some of the cost actions that we took coming into this year. We expect, sorry, in the back half, we expect margins in Q3 to be around that range. And then, of course, seasonally in Q4, you know, it sequentially will go down. But from a year-over-year standpoint, we expect to see nice improvement in the last two quarters of this year as well.

Let me just add on to that. Just, you know, yeah, I would agree. A third of that was really from the cost improvements. The team did a really good job in terms of executing on volume, and we were able to pick up some share in that business in the quarter. And, you know, a lot of the actions and so forth that the team has taken in terms of cross-pollination have really played out in the quarter. Really proud of the team.

I appreciate the color. And perhaps to offer a quick update on integration at Pump Engine and Barnes. Joe, you noted that the deals are tracking well. I'm particularly interested in Barnes and how your team has to date and how you're thinking about leveraging the foundry capacity and capabilities there.

Yeah, no, it's a great question. We had a good integration review down in Bogota a month and a half ago. And I think what impressed me is probably two things. One is our global team and our North American team was there as well. And some of their products, when we look at growth synergies, which is really the driver behind that acquisition, we're getting a lot of return on our existing and mature channels and how we bring those products to end markets, both in South America and in North America. So we're seeing that run a little bit faster than we thought. From a foundry standpoint, we know that being in region for region is the right way to serve our customers. And Jennifer just talked about our ability to respond to volume. I think it really sets us apart. The Foundry is performing well, and we're actually working on expanding the current footprint. We had some of that optionality as we acquired the company, so we're going forward with those investments. And I think it'll be two things. One is to support the additional volume growth based on that traditional set of products serving now a wider customer base. But also, I think I mentioned this last quarter, looking at... bringing some of the tools that may have been in Southeast Asia or in China back here closer to our customers is a real opportunity for us. So there's some work to do there. That's some of the investment that Jennifer called out in terms of we want to accelerate that here in the back half. There's some capital and expense to do that. But we've got good line of sight. The Foundry is performing well, and the teams are executing tremendously. So good start.

Very encouraging. Thanks again. Thanks, Brian.

Thank you. And our next question comes from the line of Ryan Connors with North Coast Research.

Good morning. Thanks, Joe, and welcome, Jennifer. Hey, Ryan. Yeah, I wanted to jump into the water side in a little more detail, specifically on mix. You mentioned their kind of large dewatering and the mixed components there in the water segment. Is that all product-driven mix, or is there some geographic mixed impacts there as well? And then based on the order boards and the backlog today, how does that mix element shape up for water in the back half?

Most of it is really product-driven mix, and I can let Russ and Jennifer add to this. But that dewatering business, as you know, is a cyclical business. It kind of has this three-year run from peak to drop. You know, we saw... We saw that business hit its peak in the back half of 2023 and then sequentially get softer last year. I know we talked about this a few times. So we see a strong order book and backlog in that business. There will be some mixed pressure that we see in that business, but most of it is product mix versus geog. The geog's read out largely as we expected.

I would just add, yeah, both groundwater and dewatering Solid, very healthy volumes. Just saw a little bit of that product mix play out. Book-to-bill, very healthy above one. It varies across geographies a little bit, but all really healthy above one with strong backlogs.

I see. I think, Ryan, you'll see less pressure from a margin standpoint. So that mix is kind of hard to pull out because we definitely – As we accelerate that acquisition, we still are seeing some of those acquisition-related costs in Q2, which diminish through the back half of the year.

Got it. Okay. And then, secondly, just talk about REZI for a minute. I know it's an important market, and it seems like everyone's waiting on a potential for a rate cut and maybe lower mortgage rates to drive that. I mean, is that the only catalyst that we're banking on here, or are there other potential markets? catalyst that can drive some more volume growth in that side of the business? Or are we just sort of, is that really the catalyst that we're waiting on?

Well, I'll take a stab at that. But, you know, that business was flattish for us, obviously, in Q2. I think to say that we're getting no help from kind of the market is true. You know, we're in the same boat as everyone else. A couple of good things about our business, you know, when we talk about other things we look at, one is given our high service and replacement demand, that business is 70 plus percent replacement for us. Our ability to serve that market has held us to hold and even take share in some cases. We believe that we're taking share there. I also think, and I think I mentioned one example, and if I didn't, you're going to hear more about it here in Q3, some really exciting new products that attend to that REGI market that we're just launching right now. So I think new products, innovation, being able to respond to our customers, all of those things help us to offset that weaker housing starts and housing sales. You know, one thing that I'd point out, too, and I think we commented on this, if you look at our water treatment business, which is probably, you know, has a more direct correlation to housing starts and sales than others, the fact that that business grew, you know, mid-plus single digits, I think is a testament to just that growth strategy, which is dealer ads, building a strong network, outserving our peers. So we had a nice set of dealer ads as well, again, in Q2, I think Jennifer referenced. So we think that there's some self-help there that can offset that soft resi market, and Q2 demonstrated that for us.

Yep, got it. And then one last one, kind of a bigger picture question. through the dewatering business and otherwise, Franklin has long been seen as somewhat more mining resource driven than maybe some of the peers. When you look at some of the things happening like the copper tariffs and supposedly the method of madness there being to bring more resource development back domestic, do you view that as a catalyst or has the portfolio changed to the point where that's not the driver that it once was?

Well, I think if you go back five plus years, we actually were more exposed to markets like oil and gas and other things. So that has come way down, and we've seen that balance. I think just in general, if we look at mining, if you look at materials and minerals, I think there's an opportunity there for us. We don't have a huge exposure to it in North America, as you referenced before. But we're working on bringing those products into North America, you know, post-acquisition of companies like MindTouch and PumpEng. And it's copper. It's, you know, there's other metals and materials where we see continued growth. So I think that's an opportunity for us. You know, it's relatively small for us today. But if that market continues to grow and if you see the need for minerals and the domestic development continue to increase, we'll be prepared for that.

Got it. Thanks for your time this morning.

Yeah, thank you. Thank you. And our next question comes from the line of Mike Halloran with RW Baird.

Hey, good morning, everyone. Morning, Mike. Maybe we just start with how you're thinking about the sequential trends and what's embedded in guidance. You know, with all the moving pieces, if you just think about it in terms of end user demand across the segments and anything unusual, and you think you're following a relatively normal cadence here. And if I think about what the guide for the back half of the year, uh, implies, it doesn't imply normal seasonality from here, normal sequentials, or is there any kind of variance as you think about it? Um, whether in the quarter or in embedded in the guide.

Yeah, that's a good, good question. Like, maybe I'll start with, uh, you know, coming into, and as we went through Q2, which if you look at headlines, if you look at tariffs, if you look at the noise globally, normal, we didn't think we'd use that term normal in terms of, obviously we executed well, we're really proud of what the team has done, but it was a more normal market than we had thought. We see those trends continuing here into the back half. We're a couple weeks in. The backlog, the order trends, the order book looked good. Parts of our business that we can see further out, we talked about dewatering, that's one example in the water space. But in the energy segment, where we can see further out there in terms of our service partners and the service stations, everything looks positive. So based on backlog, order trends, and kind of a snippet here as we get into Q3, we expect to be fairly normal, just to use that word. So we don't expect any major disruption. I think to the other questions, obviously, we watch interest rates. We watch some of those other externalities that could provide a lift to us. Not baked in, no expectation. Our sense is kind of business as usual in the back half. So yes to normal and yes to kind of the seasonal sequential. So Q3 looks, you know, looks similar to Q2 and then Q4, the sequential, you know, it's obviously a step down, but we expect to perform well.

From a tariff and from a copper perspective, you know, I think we're really proud of the work that our supply chain has done to look for various levers of pull to mitigate that and We continue to remain confident in our ability to offset for the balance of the year. And that holds true from a tariff perspective, from a copper perspective. We'll continue to look at multiple paths to win.

Thanks for that. And then just to follow up, just an update on how you're thinking about the M&A pipeline intents. I know that's part of the mandate for the team moving forward. And so just kind of any thoughts on how that's looking and where the focal points are.

Yeah, you know, we've made some really fun investments and had a specific focus here over the last three quarters to make sure that the pipeline is robust, that our team is ready to execute. And the one nice thing, Mike, in the last couple months is you definitely see a little bit more activity in terms of, you know, kind of what's out there and some things that will potentially move. So we're positive about it. We've got a good and an active funnel. You know, and I think similar to what I said last quarter, kind of our key focus right now is what are those products that can really put us into those faster growing markets, you know, take advantage of secular trends. and that we can bring through our great channel. So we expect that we'll continue to be active. It's always hard to predict what happens and when it happens, but that still is the mandate to make sure that we put that strong balance sheet to use.

Thank you. Really appreciate it.

Thanks, Mike. Thank you. And our next question comes from the line of Matt Somerville with DA Davidson.

Morning, Matt.

Good morning. And I apologize if you already addressed this. I missed some of the prepared remarks. But you reiterated your EPS guide for the year, yet you bought back 1.2 million shares of stock from one of Franklin's founding daughters. Can you sort of articulate maybe why not raise the bar from a guidance standpoint? And then I have a follow-up.

Yeah, maybe I'll start and then Russ and Jennifer can add to that. I think, you know, one is, as you know, we had a slower start to the year. Two is, you know, we've got a fairly ambitious agenda in terms of accelerating our transformation, making some of those investments. I referred to just some examples in terms of nearshoring, you know, tools in our supply chain. I mean, this is a big focus and we want to go faster to control our destiny. So I think part of the holding guidance is giving us the room to execute and There is a small benefit we got from, you know, obviously purchasing some of those shares. But I think the fact is we feel, you know, we're undervalued. I think, you know, our execution in Q2 is a good example of what we expect and hope to see going forward. But we also are focused highly on predictability, and we want to make sure that we prepare ourselves for further supply chain disruptions. We've got a couple bigger capital investments that we've accelerated, you know, in Two examples that may have referenced these in the past. We have a factory in Turkey that we're going faster on that we originally intended. And then we have a factory that we're building in India that we want to get started and get moving. So I think it's just making sure that, one, we're predictable. Two, we have room for transformation and for those key investments we think are important. But our intent is to grow and to serve the markets that we're in. And we feel that this is the best route for us here where we sit. Thank you for that.

Yeah, I was just going to say the investments that Joe referenced are heavily back half loaded, so that does impact the go forward as well.

That's helpful. Thank you. And then just as a follow-up, can you You talk about strength in orders and backlog. Can you maybe give a little bit of quantification around how those metrics look now versus this time last year? And can you review where you were at from a price-cost standpoint in the second quarter and what you expect in the back half in that regard? Thank you.

Yeah, maybe just a comment. I'll refer to Jennifer on some of this. But from a backlog standpoint, backlogs are probably up overall in the low double digits. Some of the segments, they're up more than that. As you know, Matt, we're a shorter cycle business for a good portion. So we look at book-to-bill as well. Book-to-bill is over one for all three segments. I think that's one of our better indicators where we can see out further growth. we definitely have seen a nice uplift in backlog. The energy segment, I referred to that. So from a year-over-year standpoint, as we give those reference points for backlog, that's kind of a good year-over-year view. And then from a book-to-bill standpoint, this is just, we look at the churn, we look at our daily orders, we look at what's happening even for our shorter cycle businesses, and it gives us really a good pattern and understanding of kind of what's going to happen here, at least in the near term, which says Q3, we feel pretty good about. From a price-cost standpoint, yeah, we can give you, maybe Jennifer, if you want to just talk about price-cost volume here in Q2. I think I have those numbers here as well, but it was a good blend and a good mix.

Yeah, overall, from a price-cost perspective, we were in really great shape versus the prior year. From a volume perspective, we talked about that throughout our prepared remarks. seeing a bit of an uplift year over year from a volume perspective as we've taken share in a few places, mainly distribution, a bit in energy, seeing really good performance in energy with regard to international data center projects and grid growth. And then, as I mentioned, price over cost, including the little bit of impact that we've seen in tariffs, we're covering that nicely.

Yeah, and sorry for the F-16 noise in the background here in Fort Wayne. But, yeah, price productivity definitely more than offset inflation. And I think, you know, seeing a couple points of price, seeing, you know, more than a few points of volume, I mean, those are good indicators for us to see that balance. One thing you'll see, Matt, is the inflation, you know, and some of this due to tariffs and the purchases that we had to make in Q2, some of this will read out a little, you know, more strongly today. in the back half, so they'll be a little closer in terms of the price and the inflation, but we expect it to be a positive story this year. I would add to that that some of the tariffs that could have been or that we saw throughout the quarter, we were prepared to do more in terms of our productivity, inventory, and price action. I think where we ended up in the quarter is we feel we're pretty well positioned here in the back half to more than offset tariffs, inflation, et cetera. Thanks, man.

Thank you. And I'm showing no further questions at this time. So with that, I'd like to hand the call back over to CEO Joe Rosinski for any closing remarks.

Thanks, Andrew. And we really appreciate the questions. As we close out our Q2 2025 earnings call, I want to extend my sincere thanks and gratitude to our employees and stakeholders for the dedication, hard work, and unwavering commitment. We had a solid Q2 and first half. With good order trends and healthy backlogs, we expect this to continue. Holding guidance gives us the opportunity to accelerate our transformation and position us well for 26 as we continue to monitor the act and act on tariffs and other disruptions to our market. Our strategy is working. We're excited about our prospects to find the right acquisitions, bring great customer service and innovation to our markets, and to continue to build on the great team and culture Franklin is known for. Thank you for joining us, and I hope everyone has a great week.

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