Franklin Electric Co Inc (FELE) 2024 Q1 法說會逐字稿

Hello and welcome to the Franklin Electric report first-quarter 2024 sales and earnings conference call. (Operator Instructions) Please be advised that today's conference call is being recorded.

您好，歡迎參加富蘭克林電氣 2024 年第一季銷售和收益電話會議報告。（操作員說明）請注意，今天的電話會議正在錄音。

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

現在我很高興向大家介紹財務長傑夫泰勒。

Thank you, Andrew, and good morning, everyone. Welcome to Franklin electric's first-quarter 2024 earnings conference call. With me today is Gregg Sengstack, our Chairperson and Chief Executive Officer. On today's call, Gregg will review our first-quarter business highlights. Then I will provide additional details on our financial performance. We will then take questions.

謝謝你，安德魯，大家早安。歡迎參加富蘭克林電氣 2024 年第一季財報電話會議。今天與我在一起的是我們的董事長兼執行長 Gregg Sengstack。在今天的電話會議上，格雷格將回顧我們第一季的業務亮點。然後我將提供有關我們財務業績的更多詳細資訊。然後我們將接受提問。

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.

在我們開始之前，請允許我提醒您，在我們進行本次電話會議時，我們將做出 1995 年《私人證券訴訟改革法案》含義內的前瞻性陳述。這些陳述受到各種風險和不確定性的影響，其中許多風險和不確定性可能導致實際結果與此類前瞻性陳述有重大差異。這些因素的討論可以在公司 10-K 表格年度報告和今天的收益發布中找到。本次電話會議期間所做的所有前瞻性陳述均基於目前可用的信息，但法律要求的除外。該公司不承擔更新任何前瞻性陳述的義務。

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

現在，我將把電話轉給 Gregg Sengstack。

Thank you, Jeff, and thank you all for joining us.

謝謝你，傑夫，也謝謝大家加入我們。

Our first-quarter results were slightly below our expectations, although business generally performed as expected. The Franklin team executed well and managed costs during the quarter despite much wetter weather than expected and continuing commodity price pressures. As we have previously communicated, the first quarter is seasonally our slowest quarter as it relates to demand. However, underlying activity in our core markets remains healthy.

儘管業務整體表現符合預期，但我們第一季的業績略低於我們的預期。儘管天氣比預期潮濕得多並且大宗商品價格壓力持續存在，富蘭克林團隊在本季度執行良好並管理了成本。正如我們之前所傳達的，第一季是我們季節性最慢的季度，因為它與需求有關。然而，我們核心市場的基本活動仍然健康。

Compared to our record first-quarter 2023, net sales were down $24 million or 5%. We had an exceptional start to 2023, particularly from large dewatering equipment and fueling systems, which made for a tougher year-over-year comparison. The largest contributing factors for the decrease in largely ordering equipment sales in the US to our fleet rental customers account for approximately two-thirds of the decrease and lower sales of fueling systems as demand and order patterns have normalized. Even with more moderate demand, we delivered improved gross margin versus the prior year, driven by favorable mix and continued cost control. As expected, SG&A expenses were higher than prior year due to inflationary pressure, investments in recent water treatment and distribution acquisitions, and the addition of new distribution branch locations.

與創紀錄的 2023 年第一季相比，淨銷售額下降了 2,400 萬美元，即 5%。我們在 2023 年有一個出色的開局，特別是在大型脫水設備和加油系統方面，這使得同比比較更加困難。由於需求和訂單模式已經正常化，美國向我們的車隊租賃客戶訂購的設備銷售下降的最大因素約佔加油系統銷售下降和下降的三分之二。即使需求較為溫和，在有利的組合和持續的成本控制的推動下，我們的毛利率仍較上年有所提高。正如預期的那樣，由於通貨膨脹壓力、近期水處理和分銷收購的投資以及新分銷分支機構地點的增加，SG&A 費用高於上年。

Turning to our segments, water systems' first-quarter sales and operating income declined 7% and 4%, respectively. As I previously mentioned, volumes were lower in large dewatering equipment, creating a difficult year-over-year comparison against the first-quarter record sales in 2023. Additionally, demand in the US for our groundwater pumping systems was impacted by continued unfavorable weather patterns. Operating margin improved to 16.4%, up 40 basis points versus prior year and 60 basis points versus the fourth quarter of 2023. This was driven by favorable product mix and lower freight expenses.

談到我們的細分市場，水系統第一季的銷售額和營業收入分別下降了 7% 和 4%。正如我之前提到的，大型脫水設備的銷售量較低，與 2023 年第一季創紀錄的銷售量很難進行年比比較。此外，美國對地下水抽水系統的需求受到持續不利天氣模式的影響。營業利潤率提高至 16.4%，較上年增長 40 個基點，較 2023 年第四季成長 60 個基點。這是由於有利的產品組合和較低的貨運費用所推動的。

Fueling systems sales and operating income decreased 15% and 10%, respectively versus the prior year. We are encouraged to see that the destocking activity which impacted the business in the back half of last year has mostly diminished at this point in time. As with large dewatering equipment, fueling systems record first quarter fiscal '23 created a difficult year-over-year comparison. That said, fueling systems' first-quarter operating margin came in at 30.3%, an increase of 170 basis points compared to the prior year. Improved margin was the result of favorable product mix and operating expense management.

燃油系統銷售額和營業收入較前一年分別下降 15% 和 10%。我們很高興看到去年下半年影響業務的去庫存活動目前已大部分減少。與大型脫水設備一樣，加油系統創紀錄的 23 財年第一季的年比比較也很困難。儘管如此，加油系統第一季的營業利潤率為 30.3%，比去年同期成長了 170 個基點。利潤率的提高是有利的產品組合和營運費用管理的結果。

Sales in the distribution business increased 3% from the prior year primarily due to the incremental sales impact from our 2023 acquisition. The business, similar to the water systems, was negatively impacted by unfavorable weather across many parts of United States, delaying the start of contractor installations. Operating margin was 1.2%, a 210-basis-point decline versus the prior year due to lower margins on commodity-based products as well as increased operating expenses from continued investment in growth via the recent acquisition and new branch locations announced in 2023.

分銷業務的銷售額較上年增長 3%，主要是由於我們 2023 年收購帶來的增量銷售影響。與供水系統類似，該業務受到美國許多地區不利天氣的負面影響，並推遲了承包商安裝的啟動。營業利潤率為 1.2%，比上年下降 210 個基點，原因是大宗商品產品的利潤率下降，以及透過最近的收購和 2023 年宣布的新分支機構對成長的持續投資導致營業費用增加。

Considering the impact of these investments, we are encouraged to have achieved a 50-basis-point sequential improvement in operating margins for distribution for the fourth quarter of 2023 on seasonally lower sales. Our sales team maintains line of sight to our contractors' customers' project pipelines, and as a result, we are confident we will see improving performance in sales and margin as weather improves as we enter the groundwater drilling season.

考慮到這些投資的影響，我們對 2023 年第四季分銷營業利潤率在季節性銷售額下降的情況下實現了 50 個基點的連續改善感到鼓舞。我們的銷售團隊始終專注於承包商客戶的專案管道，因此，我們相信，隨著進入地下水鑽探季節，天氣好轉，我們將看到銷售業績和利潤率的改善。

Our continued focus on the management of working capital has resulted in more normalized inventory levels with our March inventory balance at $532 million, close to $70 million lower than the same period in the prior year, although up from the end of the year in anticipation of normal seasonal demand. Consequently, our cash flow improved approximately $10 million in the first quarter of 2024 compared to the prior year. We remain committed to a balanced capital allocation strategy, so we continue to make internal investments focused on bringing additional production in-house and enhancing the integrity of our supply chain.

我們對營運資金管理的持續關注使庫存水準更加正常化，3 月份的庫存餘額為 5.32 億美元，比去年同期減少了近 7,000 萬美元，但由於預期庫存比年底有所增加。 。因此，與前一年相比，2024 年第一季我們的現金流量增加了約 1,000 萬美元。我們仍然致力於平衡的資本配置策略，因此我們繼續進行內部投資，重點是增加內部生產並增強供應鏈的完整性。

We are also actively monitoring the M&A environment, where we have seen an uptick in activity. We've invested approximately $0.5 billion since 2017 to build our distribution business and our water treatment platform. We will continue to build these businesses through bolt-on acquisitions, while we are actively looking to grow in a couple of other areas. First is manufacturers of larger pumping systems with a focus on commercial industrial end markets globally. The second is to add to our critical asset monitoring capabilities in the grid business as the demand for electricity continues to grow.

我們也積極監控併購環境，我們發現併購活動增加。自 2017 年以來，我們已投資約 5 億美元來建立我們的分銷業務和水處理平台。我們將繼續透過補強收購來發展這些業務，同時我們正在積極尋求在其他幾個領域的成長。首先是專注於全球商業工業終端市場的大型泵浦系統製造商。第二個是隨著電力需求的持續成長，增加我們在電網業務中的關鍵資產監控能力。

With effectively no net debt, we are well positioned to take advantage of opportunities that present themselves. Finally, we remain committed to returning capital to our shareholders through regular dividends and opportunistic share repurchases.

由於實際上沒有淨債務，我們處於有利地位，可以利用出現的機會。最後，我們仍然致力於透過定期股利和機會性股票回購向股東返還資本。

Looking ahead to the remainder of this year, we are mindful of the continued macroeconomic and geopolitical pressures we have to contend with. However, given the results in the first quarter and our current outlook, we are maintaining our full-year 2024 sales guidance to be in the range of $2.1 billion to $2.17 billion in sales, and our EPS guidance remain between $4.22 and $4.40.

展望今年剩餘時間，我們注意到我們必須應對的持續宏觀經濟和地緣政治壓力。然而，考慮到第一季的業績和我們當前的前景，我們將 2024 年全年銷售指引維持在 21 億美元至 21.7 億美元之間，每股收益指引維持在 4.22 美元至 4.40 美元之間。

Before turning the call back over to Jeff, I'd like to take a moment to recognize Franklin Electric and our employees for being named in Newsweek's 2024 list of America's Most Trustworthy Companies for the third consecutive year. But I'd also like to refer you to our recently published 2024 sustainability report detailing the company's efforts to positively and responsibly impact our communities over the past year. The work that we do is essential to people's lives, advances global access to clean water, and improves the safety and availability of energy worldwide. I'm also proud of the culture this management team has stewarded, one that balances focus across efficiency, sustainability, and reliability with the well-being of our employees.

在將電話轉回傑夫之前，我想花一點時間對富蘭克林電氣和我們的員工表示認可，他們連續第三年被《新聞周刊》評為 2024 年美國最值得信賴的公司。但我還想向您推薦我們最近發布的 2024 年永續發展報告，其中詳細介紹了公司在過去一年中為積極、負責任地影響我們的社區所做的努力。我們所做的工作對人們的生活至關重要，促進全球獲得清潔水，並提高全球能源的安全性和可用性。我還為這個管理團隊所管理的文化感到自豪，這種文化在效率、永續性和可靠性與員工福祉之間取得了平衡。

I will now turn the call back over to Jeff. Jeff?

我現在將把電話轉回給傑夫。傑夫？

Thanks, Gregg. Overall, our first quarter was largely in line with our expectations, as Gregg highlighted. While we started off the first quarter with sales down from our record levels last year, the Franklin team executed well with a focus on delivering for our customers and cost management which resulted in an improvement in our gross profit margins.

謝謝，格雷格。總體而言，正如格雷格所強調的那樣，我們的第一季基本上符合我們的預期。雖然我們第一季的銷售額低於去年的創紀錄水平，但富蘭克林團隊表現良好，專注於為客戶提供服務和成本管理，從而提高了我們的毛利率。

Fully diluted earnings per share were $0.70 for the first-quarter 2024 versus $0.79 for the first-quarter 2023. First-quarter 2024 consolidated sales were $460.9 million, a year-over-year decrease of 5%. The benefit to sales from our 2023 acquisitions were more than offset by lower volumes in water systems and fueling systems. Water system sales in the US and Canada were down 12% compared to the first quarter of 2023 due to volume declines.

2024 年第一季完全攤薄後每股收益為 0.70 美元，而 2023 年第一季為 0.79 美元。2024 年第一季合併銷售額為 4.609 億美元，年減 5%。我們 2023 年收購帶來的銷售收益被供水系統和加油系統銷售下降所抵銷。由於銷量下降，美國和加拿大的供水系統銷售額與 2023 年第一季相比下降了 12%。

Sales of large dewatering equipment decreased 50% compared to record quarterly sales in the prior-year quarter, and sales of groundwater pumping equipment decreased 8%. These sales declines were partially offset by the incremental sales impact from our recent water treatment acquisition. Sales of all other surface pumping equipment were flat compared to the first-quarter 2023.

與去年同期創紀錄的季度銷售額相比，大型脫水設備的銷售額下降了 50%，地下水抽水設備的銷售額下降了 8%。這些銷售下降部分被我們最近收購水處理業務帶來的增量銷售影響所抵銷。與 2023 年第一季相比，所有其他地面泵送設備的銷售額持平。

Water system sales in markets outside the US and Canada increased by 4% overall as sales increased in all major markets, Latin America, EMEA, and Asia Pacific. Water systems' operating income was $47.1 million in the first quarter 2024, down $1.9 million or 4% versus the first-quarter 2023. Operating income margin was 16.4%, a year-over-year increase of 40 basis points. The decrease in operating income was primarily due to lower sales. Operating income margin improved due to favorable product mix shifts and lower freight expenses.

由於拉丁美洲、歐洲、中東和非洲以及亞太地區所有主要市場的銷售額均有所增長，美國和加拿大以外市場的水系統銷售額總體增長了 4%。2024 年第一季度，供水系統的營業收入為 4,710 萬美元，比 2023 年第一季減少 190 萬美元，即 4%。營業利益率為16.4%，較去年同期成長40個基點。營業收入下降主要是因為銷售額下降。由於有利的產品結構變化和較低的運費，營業利潤率有所改善。

Distribution's first-quarter sales were $147 million versus the first-quarter 2023 sales of $143 million, a 3% increase. The distribution segment's operating income was $1.8 million for the first quarter, a year-over-year decrease of $2.9 million. Operating income margin was 1.2% of sales in the first quarter of 2024 versus 3.3% in the prior year. Income was negatively impacted by margin compression from continued lower pricing on commodity based products and investments in new branch locations.

Distribution 第一季銷售額為 1.47 億美元，較 2023 年第一季銷售額 1.43 億美元成長 3%。第一季分銷部門營業收入為180萬美元，較去年同期減少290萬美元。2024 年第一季營業利益率為銷售額的 1.2%，而前一年為 3.3%。商品產品定價持續走低以及新分公司投資導致利潤壓縮，對收入產生了負面影響。

Fueling system sales in the first quarter of 2024 were $62.1 million. Sales decreased $10.6 million or 15% compared to the prior year. Fueling system sales in the US and Canada decreased 11% compared to the first quarter of 2023. The decrease was across all product lines as customer buying patterns have normalized after a record first-quarter sales in 2023. Outside the US and Canada, fueling system sales decreased 16% due primarily to lower sales in Asia Pacific.

2024 年第一季加油系統銷售額為 6,210 萬美元。銷售額比上年減少 1,060 萬美元，或 15%。與 2023 年第一季相比，美國和加拿大的加油系統銷售額下降了 11%。由於 2023 年第一季銷售額創歷史新高後，客戶購買模式已正常化，所有產品線都出現下降。在美國和加拿大之外，加油系統銷售額下降了 16%，這主要是由於亞太地區銷售額下降。

Fueling systems' operating income was $18.8 million compared to $20.8 million in the first-quarter 2023. The first-quarter 2024 operating income margin was 30.3% compared to 28.6% of net sales in the prior year. Operating income margin increased primarily due to price realization, lower freight cost, and a favorable product sales mix shift.

加油系統的營業收入為 1,880 萬美元，而 2023 年第一季為 2,080 萬美元。2024 年第一季營業利潤率為 30.3%，而上年淨銷售額為 28.6%。營業利潤率的增加主要是由於價格實現、運費成本降低以及有利的產品銷售組合轉變。

Franklin Electric's consolidated gross profit was $163.6 million for the first-quarter 2024, a 1% year-over-year increase. Gross profit as a percentage of net sales was 35.5% in the first-quarter 2024, up 200 basis points versus 33.5% in the prior year. The gross profit margin was favorably impacted in 2024 by product mix and lower freight cost in water systems and fueling systems, partially offset by margin compression from favorable pricing of commodity-based products from the distribution business.

富蘭克林電氣 2024 年第一季綜合毛利為 1.636 億美元，年增 1%。2024 年第一季毛利佔淨銷售額的百分比為 35.5%，比前一年的 33.5% 成長了 200 個基點。2024 年，毛利率受到產品組合以及供水系統和加油系統運輸成本降低的有利影響，但部分被分銷業務基於商品的產品的有利定價所帶來的利潤壓縮所抵消。

Selling, general, and administrative or SG&A expenses were $115.6 million in the first quarter of 2024 compared to $109.5 million in the first quarter of 2023. The increase in SG&A expenses were due to the incremental expense from recent acquisitions, new branch locations and distribution, and higher compensation cost. Consolidated operating income was $47.9 million in the first-quarter 2024, down $4.7 million or 9% from $52.6 million in the first-quarter 2023. The decrease in operating income was primarily due to lower sales.

2024 年第一季的銷售、一般和管理或 SG&A 費用為 1.156 億美元，而 2023 年第一季為 1.095 億美元。SG&A 費用的增加是由於最近的收購、新的分行地點和分銷以及更高的補償成本帶來的增量費用。2024 年第一季合併營業收入為 4,790 萬美元，比 2023 年第一季的 5,260 萬美元減少 470 萬美元，降幅為 9%。營業收入下降主要是因為銷售額下降。

First-quarter 2024 operating income margin was 10.4% versus 10.9% of net sales in the first-quarter 2023. Below operating income, higher foreign exchange expense primarily due to hyperinflation in Argentina and Turkey was partially offset by lower interest expense, which equates to a decrease of approximately $0.02 in earnings per share. The effective tax rate was 22% for the quarter compared to 21% in the prior-year quarter.

2024 年第一季營業利潤率為 10.4%，而 2023 年第一季淨銷售額為 10.9%。低於營業收入的主要是由於阿根廷和土耳其的惡性通貨膨脹而導致的較高的外匯費用被較低的利息費用所部分抵消，這相當於每股收益減少了約 0.02 美元。本季的有效稅率為 22%，而去年同期為 21%。

The company purchased approximately 78,000 shares of its common stock in the open market for about $7.4 million during the first-quarter 2024. At the end of the first quarter, the remaining share repurchase authorization is about 839,000 shares. Last week, the company announced a quarterly cash dividend of $0.25 that will be paid May 16 to shareholders of record as of May 2.

該公司在 2024 年第一季以約 740 萬美元的價格在公開市場購買了約 78,000 股普通股。一季末，剩餘股份回購授權約83.9萬股。上週，該公司宣布季度現金股利為 0.25 美元，將於 5 月 16 日向截至 5 月 2 日登記在冊的股東支付。

This concludes our prepared remarks. We'll now turn the call over to Andrew for questions.

我們準備好的演講到此結束。我們現在將電話轉給安德魯詢問。

Thank you. (Operator Instructions) Bryan Blair, Oppenheimer.

謝謝。（操作員說明）布萊恩·布萊爾，奧本海默。

I was hoping you could offer a little more color on how orders trended through the quarter and into Q2 and how your team views the relative puts and takes or upside downside drivers versus the reiterated full-year guidance at this point.

我希望您能提供更多關於本季度和第二季度訂單趨勢的信息，以及您的團隊如何看待相對的看跌期權或上下行驅動因素與重申的全年指導。

I mean, from how it trended during the quarter, I think it trended pretty much as we would expect it with the normal seasonal profile. Typically, it's going to start slow and then build as we move through the quarter, so lower in January and then finishing stronger in March. I believe we saw that puts and takes there. The one thing that I think impacted the business more than we had expected was the weather. We continue to see much wetter weather in the US, and that impacted us and certainly in the western part of the US, and so that was a factor that was worse than we had forecast or expected.

我的意思是，從本季的趨勢來看，我認為它的趨勢與我們對正常季節性特徵的預期非常相似。通常情況下，它會開始緩慢，然後隨著我們進入本季度而逐漸增強，因此在一月份較低，然後在三月結束時走強。我相信我們在那裡看到了 put 和 take 。我認為對業務影響比我們預期更大的一件事是天氣。我們繼續看到美國天氣更加潮濕，這影響了我們，當然也影響了美國西部地區，所以這是一個比我們預測或預期更糟糕的因素。

And then the other is, the commodity prices, particularly for pipe, continue to be under pressure. That market has to stabilize at some point, Bryan. We've been waiting for that for a couple of quarters now. But we continue to see pricing pressures there, and that's more than four quarters in a row that we've seen those pricing pressures on commodities. So when you look at it from a year-over-year impact, it does have an impact.

另一方面，大宗商品價格，特別是管材價格，繼續面臨壓力。布萊恩，這個市場必須在某個時候穩定下來。我們已經等了幾個季度了。但我們仍然看到那裡的定價壓力，而且我們已經連續四個多季度看到大宗商品面臨定價壓力。因此，當你從同比影響來看時，它確實產生了影響。

I understand. I appreciate the color. If we could dig into fueling systems trends, what was the growth in critical asset monitoring in the quarter? And at this point, how mix accretive is that buildout? Obviously, the segment margin came in, and at least relative to our model, ahead of expectations, and the optics are quite favorable there.

我明白。我很欣賞它的顏色。如果我們能夠深入研究加油系統趨勢，本季關鍵資產監控的成長是多少？在這一點上，這種擴建對混合成長有多大？顯然，該細分市場的利潤率至少相對於我們的模型而言，超出了預期，而且光學方面也相當有利。

Yeah, I would say that the grid solutions business performed pretty much in line with the way the fueling business did in terms of -- It was down on a year-over-year basis, and so we -- while that business has been growing strong double digits, and we expect it to continue to grow strong double digits. I think it went through some of the same dynamics that we saw on the fueling side where people had built up inventory, destocked, and now with supply availability, lead times improved, people are waiting, or not placing their orders as early as they did in prior year. And so we saw a year-over-year decline in grid solutions.

是的，我想說，電網解決方案業務的表現與燃料業務的表現非常一致——它逐年下降，所以我們——雖然該業務一直在增長強勁的兩位數，我們預計它將繼續強勁的兩位數增長。我認為它經歷了一些與我們在加油方面看到的相同的動態，人們已經建立了庫存，去庫存，現在隨著供應的可用性，交貨時間的改善，人們正在等待，或者沒有儘早下訂單前一年。因此，我們看到電網解決方案逐年下降。

Okay. Understood. And one last one, if I may. Any color on the integration of Action Manufacturing and commentary on the M&A pipeline. It seems optimistic. Any color you can offer on the opportunities over the near-term potential actionability whether in water treatment distribution, the typical focus areas for you or you called out a couple of new potential areas for investment as well?

好的。明白了。如果可以的話，還有最後一件事。對 Action Manufacturing 整合的任何顏色以及對併購管道的評論。看起來很樂觀。您對近期潛在可操作性機會有何看法，無論是在水處理分配方面，還是您的典型重點領域，或者您也指出了一些新的潛在投資領域？

Yeah, Bryan. The Action Integration is going on schedule. We actually have pulled up, bringing them onto our ERP system. We're actually doing that tomorrow. And both distribution and water treatment, we're able to get businesses onto our system very quickly and get them aligned in our business practices, layouts of their warehouse, and their assembly locations. So we improve flow, and Action is right on plan, actually a little bit ahead of plan on top line and bottom line, though we have the platform that we need to operate in both distribution and water treatment, Groundwater Distribution and Water Treatment.

是的，布萊恩。行動整合正按計劃進行。我們實際上已經把它們帶入了我們的 ERP 系統。我們明天實際上就這麼做了。無論是配送還是水處理，我們都能夠非常快速地讓企業進入我們的系統，並讓他們與我們的業務實踐、倉庫佈局和組裝地點保持一致。因此，我們改善了流量，行動正按計劃進行，實際上在營收和利潤方面都比計劃提前了一點，儘管我們擁有在分配和水處理、地下水分配和水處理方面運作所需的平台。

But as people decide to exit the business, we're available to be an acquirer of that business, and we'll continue to do so. We are also being more intentional now that I think, as the world has accepted higher interest rates particularly in United States and valuations, I think the other sellers and buyers are getting better understanding of what valuations are in this new interest rate environment, we're just seeing higher deal flow in manufacturing assets.

但當人們決定退出該業務時，我們就可以成為該業務的收購者，而我們將繼續這樣做。我認為，現在我們也更加有意，因為世界已經接受了更高的利率，特別是在美國和估值，我認為其他賣家和買家正在更好地了解在這種新的利率環境下的估值，我們'我們剛剛看到製造業資產的交易量增加。

And as core, Franklin is a manufacturing company, our distribution decision was afforded great and a channel where we're a leader in in the United States and Groundwater. So at our core, we're a manufacturer. At our core, we're a global company. And so we're looking again at opportunities to acquire companies that have larger pumps to augment what people recognize us being a leader in residential and in Ag. So we want to be intentional about that.

作為核心，富蘭克林是一家製造公司，我們的分銷決策非常出色，我們在美國和地下水領域處於領先地位。因此，從本質上講，我們是一家製造商。從本質上講，我們是一家全球性公司。因此，我們正在再次尋找機會收購擁有更大水泵的公司，以增強人們對我們作為住宅和農業領域領導者的認可。所以我們希望有意識地做到這一點。

And that's where we're seeing also greater deal flow and deal activity and also with adjacencies and being mindful that we've grown this company over time through intentional expansion into adjacent markets but thoughtfully doing that so that their objectives make logical sense from the standpoint of either distribution, common customers. And so we're looking at that as well. But definitely, we've seen just more deal flow over last several months, last couple of quarters than, say, maybe a year ago.

這就是我們看到更多交易流和交易活動以及鄰近地區的地方，並且要注意，隨著時間的推移，我們通過有意擴展到鄰近市場來發展這家公司，但要深思熟慮地這樣做，以便從角度來看他們的目標具有邏輯意義無論是分佈還是共同客戶。所以我們也在考慮這個問題。但可以肯定的是，我們在過去幾個月、過去幾個季度看到的交易量可能比一年前還要多。

Appreciate all the color.

欣賞所有的顏色。

Walter Liptak, Seaport Research.

沃爾特·利普塔克，海港研究中心。

So considering the slightly weaker than expected first quarter and related to the wetter weather, you maintain the guidance for the full year. Can you talk about your confidence levels? What has to go right second quarter in the back half to get to your guidance?

因此，考慮到第一季略弱於預期以及與潮濕天氣有關，您維持全年指引。您能談談您的信心程度嗎？第二季後半段必須做什麼才能達到您的指導？

Yeah, well, I mean, I would say, first of all, that we maintain our guidance. We felt confident with the guidance range that we have out there. One quarter under our belt, slightly below our expectations, but I would still say generally in line with our expectations. So from that perspective, not a major change.

是的，嗯，我的意思是，我想說，首先，我們維持我們的指導。我們對現有的指導範圍充滿信心。四分之一，略低於我們的預期，但我仍然會說整體符合我們的預期。所以從這個角度來看，這並不是重大改變。

I've already talked about a couple other things that impacted us were a little bit wetter weather and some of the commodities, pricings. But we certainly expected that 2024 was really going to start much like 2023. And then I think we signaled that when we talked that business was going to come into the year and then build as we move through the year. And I think we still see that happening.

我已經談到了影響我們的其他一些事情，包括潮濕的天氣和一些商品的價格。但我們當然預期 2024 年的開始會與 2023 年非常相似。然後我認為，當我們談論業務時，我們就發出信號，業務將在今年開始，然後隨著這一年的進展而不斷發展。我認為我們仍然看到這種情況發生。

Overall, we don't predict the economy. We're not economists, but we had said no recession. I think we still don't see a recession coming. I do believe that we expect interest rates to stay higher for longer now. That will have a little impact on our housing market, and areas like water treatment will be a little more impacted -- are a little more impacted by housing. But overall, I think our view there is pretty much intact for the full year guidance.

整體而言，我們不預測經濟。我們不是經濟學家，但我們說過不會出現衰退。我認為我們仍然沒有看到經濟衰退的到來。我確實相信我們預計利率將在更長時間內保持在較高水準。這將對我們的房地產市場產生一些影響，而水處理等領域將受到更大的影響——受住房的影響更大一些。但總體而言，我認為我們對全年指導的看法幾乎完好無損。

There was a question last quarter about first half and second half. I think we're still generally in line with how the business has performed over time in that regard. And so we feel good about the guidance that we have out there through the end of the year.

上個季度有一個關於上半場和下半場的問題。我認為我們在這方面總體上仍然符合業務長期以來的表現。因此，我們對今年年底的指導感到滿意。

Okay. Okay, great. And then thinking about second quarter, are you -- you've talked about how the destocking in fueling seems to be behind you, are you seeing more sell through now going into the construction season?

好的。好的，太好了。然後想想第二季度，您是否已經談到燃料庫存的去庫存似乎已經過去，您是否看到現在進入建築季節有更多的銷售？

Yeah, I would say -- we're right at the beginning of the groundwater drilling season. And so I think we are seeing a pickup in activity, but we're on the front end of it at this point in time. And so there's still a ways to go. As we said, first quarter was impacted by weather in some key areas, the West Coast, Texas, other parts of the US.

是的，我想說——我們正處於地下水鑽探季節的開始。因此，我認為我們看到活動有所回升，但目前我們正處於活動的前端。所以還有很長的路要走。正如我們所說，第一季受到一些關鍵地區、西海岸、德克薩斯州和美國其他地區天氣的影響。

We've started to see some improvement there, but it's hard to predict the weather. And so we'll just -- I mean, we take what we get when we talk about the weather impact on the business overall. We expect a normal seasonal pick-up in the second quarter. So our business is pretty consistent from that regard.

我們已經開始看到那裡有一些改善，但很難預測天氣。因此，我們將 - 我的意思是，當我們談論天氣對整體業務的影響時，我們會採取我們所得到的。我們預計第二季將出現正常的季節性回升。因此，從這方面來看，我們的業務非常一致。

Okay. And how about related to the fueling part of the business, are you seeing better sell-through for fueling equipment now that the destock is over?

好的。與燃料業務部分相關的是，既然去庫存結束了，您是否看到燃料設備的銷售情況有所改善？

Yeah. I think the conversations that we have with our customers in fueling are indicative that they expect to have a more normal year this year. And so I think we're also on the front end of that curve as well. And so the indication at this point is that we'll see fueling pickup as we move through the middle part of the year. And like I said, these customer conversations are positive at this point, but reflective of really a more normal level, not an increase in stocking, not a destocking environment, and so that's where we are in fueling.

是的。我認為我們與客戶在加油方面的對話表明他們預計今年會更加正常。所以我認為我們也處於該曲線的前端。因此，目前的跡像是，隨著今年中期的到來，我們將看到經濟的加速回升。就像我說的，這些客戶對話目前是積極的，但反映了真正更正常的水平，而不是庫存增加，而不是去庫存環境，所以這就是我們正在加油的地方。

Okay. Great.

好的。偉大的。

Mike Halloran, Baird.

麥克·哈洛倫，貝爾德。

Just a couple here. One, when we think about the pricing dynamics in the marketplace on the water side, anything of note? I know that commodity pricing was mentioned in the prepared remarks, just more thinking competitively. And similarly, any thoughts (technical difficulty)

這裡只有一對夫婦。第一，當我們考慮水務市場的定價動態時，有什麼值得注意的嗎？我知道準備好的發言中提到了商品定價，只是更多地考慮競爭性。同樣，任何想法（技術難度）

Michael, the last part of your question broke up. Could you please repeat that?

邁克爾，你問題的最後一部分中斷了。能否請你再說一次嗎？

Yeah. Similarly, any thoughts on the inventory levels on the water side in general?

是的。同樣，對水務方面的整體庫存水準有什麼想法嗎？

Jeff can give a little more detail. I'd say that the pricing is more kind of pre-COVID, where you're seeing a little more promotional activity in groundwater. The RSS channel, residential pricing, has been getting kind of flattish. And the comment on dewatering, I remember at our conference -- your conference back in November, we talked about the durability of Franklin's business across the globe and the fact there were multiple channels and one we'd still see the challenges is the cyclicality of that dewatering business with the overall companies.

傑夫可以提供更多細節。我想說的是，定價更像是新冠疫情之前的價格，你會看到地下水方面有更多的促銷活動。RSS 頻道的住宅定價已經變得有些平淡。關於脫水的評論，我記得在我們的會議上——你們在11 月的會議上，我們討論了富蘭克林在全球範圍內業務的持久性，以及事實上有多種渠道，我們仍然看到挑戰是周期性與整體公司的脫水業務。

And so when you start seeing slowdowns, pricing action there get a little competitive, but we've been able to maintain margins, as you saw in our results. And then on the -- and outside the United States, we're getting price, interestingly enough, with respect to inflation, so we're getting price in EMEA. And in the hyperinflation markets, Turkey and Argentina, we price in and dollars are priced in euros. So that is our spot pricing, so that kind of helps insulate us.

因此，當你開始看到經濟放緩時，那裡的定價行動就會變得有點競爭，但我們一直能夠保持利潤率，正如你在我們的業績中看到的那樣。然後在美國以外的地區，有趣的是，我們得到了與通貨膨脹有關的價格，所以我們得到了歐洲、中東和非洲地區的價格。在土耳其和阿根廷等惡性通貨膨脹市場，我們以歐元定價，美元以歐元定價。這就是我們的現貨定價，這有助於我們隔離。

With respect to inventory levels, we look at -- and headwaters being kind of indicator of the groundwater channel, and they're bringing inventory levels down compared to last year, which we commented on.

關於庫存水平，我們關注的是——源頭是地下水渠道的一種指標，與去年相比，它們使庫存水平下降，我們對此進行了評論。

Our overall inventories are down, I think what, $70 million, and part of that is distribution because the supply chains are better and the lead times are coming down. And I think that all of the distributors in the channel are probably doing similar things. So we're probably still seeing, I don't really want to say destocking, but certainly inventory is probably at appropriate levels.

我們的整體庫存下降了，我想是 7000 萬美元，其中一部分是分銷，因為供應鏈更好了，交貨時間也縮短了。我認為該通路中的所有經銷商可能都在做類似的事情。因此，我們可能仍然看到，我並不是真的想說去庫存，但庫存肯定可能處於適當的水平。

Jeff and I were just talking before the call that one thing we all need to be mindful of is that, as the world dries out, here in United States we have -- of 130 years, we actually had a wetter year, 120th this year than in the first quarter of the year at 110th weather last year at this time, and one did not plan for that, but you can't plan for the weather. You can just respond to it.

傑夫和我在電話會議之前談到，我們都需要注意的一件事是，隨著世界乾旱，在美國，我們已經經歷了130 年，實際上我們經歷了一個濕潤的年份，今年是第120年比去年第一季的天氣第 110 次還要高，人們沒有為此做好計劃，但你無法為天氣做好計劃。你可以只回應它。

As the world dries out, the likelihood of seeing some good demand in Ag as we always start seeing pumps getting turned on. So I think the channel inventories, to answer your question, specifically, I think it's in good shape. I don't think it's overly high. I don't think it's overly low.

隨著世界乾旱，農業可能會出現一些良好的需求，因為我們總是開始看到水泵被打開。所以我認為渠道庫存，為了回答你的問題，具體來說，我認為它的狀況良好。我不認為它太高了。我不認為它太低了。

And Jeff, you have additional color to add there?

傑夫，你還有什麼要補充的嗎？

No. I think you hit it right on, Gregg. I mean, the business as a whole, water, fueling, and distribution, we are getting positive pricing. As Gregg mentioned, in water, we're a little more favorable outside the US. But generally, low single digits, more of a return to normal from what we saw several years ago and less frequent price increases than when we are in the high inflation environment. Distribution is getting good price on what I would call the core products, pumps, motors, drives, and controls. The commodity piece continues to be negative price in the current environment. So that's what we're seeing across the business.

不。我認為你說得對，格雷格。我的意思是，整個業務，包括水、燃料和配送，我們都得到了積極的定價。正如格雷格所提到的，在水方面，我們在美國以外的地區更有利一些。但總體而言，個位數較低，與幾年前的情況相比，更多的是恢復正常，而且與高通膨環境下相比，價格上漲的頻率較低。我所說的核心產品、幫浦、馬達、驅動器和控制裝置的分銷價格很高。在當前環境下，大宗商品繼續處於負價。這就是我們在整個行業中看到的情況。

Great. And then secondly, just on the margins for the water side, good seasonal margins there. Obviously, you mentioned in the prepared remarks that mix was a benefit. How do you think about what the run rate looks like or how to think about modeling that for the rest of the year?

偉大的。其次，就在水邊的邊緣，那裡有良好的季節性利潤。顯然，您在準備好的發言中提到混合是一種好處。您如何看待運行率，或如何考慮對今年剩餘時間的運行率進行建模？

Yeah, I think the -- I mean, we got a favorable mix particularly from the decline in large dewatering which is at the low end of the water systems margin range. And so with that being a lower percentage of the overall mix, that will be a favorable mix impact for us. We do expect large dewatering to continue to be down year over year as we move through 2024.

是的，我認為——我的意思是，我們得到了有利的組合，特別是由於大型脫水量的下降，而大型脫水量處於水系統利潤範圍的低端。因此，由於其在整體組合中所佔的比例較低，這將對我們產生有利的組合影響。我們確實預計，隨著 2024 年的到來，大規模脫水量將繼續逐年下降。

And so I think the best way to model it, Mike, is just assume the current mix that we have on a go-forward basis, and then we'll see as it happens, I will mention though that large dewatering is going to be lumpy this year as we move through the year. There's a lot of movement there in terms of quarter-to-quarter impact.

因此，麥克，我認為建模的最佳方法是假設我們在未來的基礎上現有的組合，然後我們會看到它發生的情況，我會提到，儘管大規模脫水將是當我們度過這一年時，今年的情況會很不穩定。就季度影響而言，有很多變化。

(Operator Instructions) Matt Summerville, D.A. Davidson.

（操作員說明）Matt Summerville，D.A.戴維森。

Can you maybe talk about kind of if embedded in your guidance for the year, what sort of organic outlook you're assuming for water distribution and fueling in '24 relative to '23? Just maybe a little bit more segment granularity there, and I have a follow-up.

您是否可以談談您對 24 年相對於 23 年的供水和燃料供應的有機展望，如果嵌入您今年的指導中？只是可能會有更多的分段粒度，我有一個後續行動。

Yeah, a little more organic outlook. I mean, I think for the guidance overall on a full-year basis, we're low to mid-single digits topline growth. In water systems, I think we expect pretty normal organic growth for the business, excluding the impact from large dewatering, which we know it's going to be down on a year-over-year basis. And so that'll be in that normal range that we talked about in that 3% to 5% range.

是的，更有機的觀點。我的意思是，我認為就全年的整體指導而言，我們的收入成長處於低至中個位數。在供水系統中，我認為我們預期業務會出現相當正常的有機成長，排除大規模脫水的影響，我們知道大規模脫水的影響將會比去年同期下降。所以這將在我們討論的 3% 到 5% 範圍內的正常範圍內。

Fueling, I think fueling will be slightly lower this year, still net positive overall, but they've come off of a really strong year in 2023, and we're seeing a bit of a normalization in terms of demand in that market. So still positive overall.

加油，我認為今年的加油量會略有下降，總體上仍為淨正值，但他們已經在 2023 年經歷了非常強勁的一年，我們看到該市場的需求有點正常化。所以整體來說還是正面的。

And then distribution, distribution on an organic basis, I think similar to what we see in water systems and possibly some upside in distribution, as we come into season when the market picks up.

然後是分配，有機分配，我認為類似於我們在供水系統中看到的情況，並且隨著市場回暖進入旺季，分配可能會有一些好處。

Got it. And then just a follow up on water and distribution. If you look at US, Canada, how did your business perform in terms of residential versus ag? And how are you thinking about organic outlooks there for '24 relative to '23?

知道了。然後是關於水和分配的後續行動。如果您看看美國、加拿大，您的企業在住宅與農業的表現如何？您如何看待 24 世紀相對於 23 世紀的有機前景？

Yeah, interesting question. In the first quarter on a year-over-year basis, residential was down slightly, I would say low single digits, and that's reflective of our groundwater business which was somewhat impacted by weather during the quarter. Ag was down a little more in the quarter. Ag was down mid single digits for the quarter on a year-over-year basis, and I also believe weather was a factor that impacted Ag overall.

是的，有趣的問題。第一季同比，住宅業務略有下降，我想說的是低個位數，這反映了我們的地下水業務在該季度受到天氣的影響。本季 Ag 略有下降。本季 Ag 年減了個位數，我還認為天氣是影響 Ag 整體的因素。

And then, Matt, our other residential surface pump business was essentially flat.

然後，馬特，我們的其他住宅地面泵業務基本上持平。

Okay. With respect to dewatering given I think that business is coming off of a record year in '23 and it is going to be a topline headwind this year, how much of a decline do you expect in large dewatering pumps on a revenue basis in '24 relative to '23 as we think about modeling that in with Jeff's comments on the overall organic outlook for water ex that business?

好的。關於脫水，我認為業務將在 23 年創下創紀錄的一年，並且今年將成為主要逆風，您預計 24 年大型脫水泵的收入會下降多少相對於'23，當我們考慮建模時，傑夫對水產業整體有機前景的評論是什麼？

Yeah, Matt. So there's a -- let me unpack that a little bit. There's a couple of pieces there. So when we talk about large dewatering, we have a large dewatering business that is global. And then we have a piece of this is primarily US, Canada, which is selling to the fleet rental companies. And so we are seeing the business to the fleet rental companies. Primarily in the US is where we saw the significant pullback on a year-over-year basis of about 50% in the first quarter.

是的，馬特。所以有一個——讓我稍微解開一下。那裡有幾塊。因此，當我們談論大型脫水時，我們擁有全球性的大型脫水業務。然後我們的一部分主要是美國、加拿大，它們賣給車隊租賃公司。因此，我們看到了車隊租賃公司的業務。主要是在美國，我們第一季較去年同期大幅回落約 50%。

Our business globally for the first quarter was down 50% in the US, Canada. It was actually up 10% outside of the US and Canada. And so that gets us to a lower year-over-year decline of about 40%. So it's really the large fleet rental business in the US and Canada, where we're seeing the pressure in this year. I think our business overall, we would expect it to be down in the mid-teens for the full year coming off of a record year in 2023 globally of about $200 million in sales.

我們第一季的全球業務在美國、加拿大下降了 50%。美國和加拿大以外的地區實際上上漲了 10%。因此，我們的年減幅度較小，約為 40%。因此，今年我們看到的壓力實際上是美國和加拿大的大型車隊租賃業務。我認為我們的整體業務預計在 2023 年全球銷售額約 2 億美元創紀錄的一年後全年將下降 15%左右。

Thank you. I will now turn the call back over to CEO, Gregg Sengstack, for any closing remarks.

謝謝。現在，我將把電話轉回給執行長 Gregg Sengstack，讓其發表結束語。

We thank you for joining us this morning in our conference call, and we look forward to speaking to you in July with our second-quarter results. Have a good week.

我們感謝您今天早上參加我們的電話會議，我們期待在 7 月向您介紹我們的第二季業績。祝你一周愉快。

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

女士們、先生們，感謝您的參與。今天的節目到此結束，您現在可以斷開連線了。