Hello, and welcome to the Franklin Electric Third Quarter 2024 Sales and Earnings Conference Call. Please note that today's conference is being recorded. I am now pleased to introduce our Chief Financial Officer, Jeff Taylor.

Thank you, Andrew, and welcome, everyone, to Franklin Electric's Third Quarter 2024 Earnings Conference Call. With me today is Joe Ruzynski, our Chief Executive Officer. On today's call, Joe will review our third quarter business highlights, then I will provide additional details on our financial performance, and Joe will make some final comments. We will 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 for the first time, and these 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.

Thanks, Jeff, and thank you all for joining us today. I'm excited to be hosting my first call as Franklin CEO. While our third quarter results were short of our expectations, they underscore the strong execution we are seeing in our segments and highlight some positive trends as we look to the future. As we've seen throughout the year, macro trends such as low housing starts and existing home sales, as well as unfavorable weather patterns, particularly in the US, and movements in commodities have pressured our sales. Our higher gross profit continues to showcase our strong operational execution, supported by our global business, diverse customer base, and wide portfolio of products. Our investments in new products, commercial teams, integration of recent acquisitions, and some one-time costs have led to higher SG&A expenses impacting our bottom line. We expect to see the benefit of these investments and normalization of costs as we enter 2025. Moving to Page three of the slide deck, I'd like to give a few updates on our CEO transition process. One of my goals when I first took the role was to listen and to learn. I've had the opportunity over the last three months to spend time with our growing teams, our customers, and our investors. I'd like to start the call by sharing some of these learnings that support my optimism for our future. First, we have a passionate and committed team. This is evident in the external recognition we've received, which I'll touch on shortly. I'm also incredibly pleased to consistently see our team's commitment to our culture, and that has translated into a pride in service that is being noticed by our customers. Our customers and distributors have shared that they view our clear commitment to service as a differentiator, and they place a high value on our customer intimacy. Our leading products and quality of service are reasons why we have continued to develop customer trust and in turn, expand our business over the long term. Over the last few years, our commitment to meeting demand for water where it is most critically needed has led to exceptional global growth in the face of disruptions, tariffs, and other uncontrollable events. Our ability to maintain a strong track record and healthy balance sheet while executing in a challenging market is what sets us apart. Our focus moving forward is to increase enterprise efficiency as we accelerate innovation and growth. Our team has great ideas and new products and is implementing our strategy. We are putting an emphasis on addressing critical water needs in growing markets, providing industry-leading service to our customers with a strong distribution channel, focusing on faster-growing verticals, and delivering productivity with our Franklin operating system. I'm excited about where we will go from here. Moving to Slide 4. Going forward, we will share quarterly updates highlighting achievements that showcase our culture and our commitment to delivering long-term value for all stakeholders. As I mentioned a moment ago, one thing I've seen in my early days here as CEO is the pride of our workforce and commitment we have to our employees, our customers, and community. The awards that Franklin has received from Newsweek, USA Today, the Indiana Chamber of Commerce, and others, again, show that others are recognizing this commitment. Franklin is a great place to work and a company that delivers on its promises, and we're excited to build on this reputation. Moving to Slide five to address our results. Consolidated third quarter sales of $531 million declined 1%, with growth both in water and distribution segments, offset by continued pressure in the Fueling business. While we've seen a pullback in our US fleet business for large dewatering products, the broader demand environment remains healthy across our core businesses as we continue to lap comparable periods of strong sales from pent-up demand and higher backlogs due to supply chain constraints. Overall demand this year didn't offset the elevated backlog conversion we enjoyed in 2023; however, order patterns across most of our businesses are positive, giving us confidence as we head into 2025. We achieved strong operating margin performance in the quarter of 13.8%, led by our Fueling Systems segment and improvement in our Distribution segment, largely due to the disciplined approach in managing costs and streamlining operations. Margins in Water Systems were down slightly year-over-year, but it remained strong. We continue to identify opportunities to streamline costs across the organization and are currently in the process of executing additional cost actions to bring SG&A as a percentage of sales more in line with historical norms. Turning to our segments on Slide 6. Our Water Systems business remains solid with steady replacement demand and orders up mid-single digits year-over-year. We delivered low single-digit sales growth against a tough year-over-year comparison as large dewatering equipment volume has normalized following record sales activity to our US fleet rental customers in the prior year period. This headwind was more than offset by growth outside the US in groundwater and other surface pump sales. New products in wastewater and mining are also showing growth. Water treatment also performed well, largely driven by our recent acquisitions, though there's been some recent impact in softness from the US housing market. Regionally, sales in EMEA and Asia Pacific were up, while increases in Latin America were offset by the negative impact of foreign currency translation. In our Fueling Systems segment, sales declined 10% compared to the prior year period, and we accelerated the conversion of an elevated customer order backlog. That backlog has returned to normalized levels by the end of the third quarter in 2023. So, we expect these recent periods of tough year-over-year comps in fueling are behind us. The environment was generally comparable with the second quarter when we saw consistent demand, but not the pickup we had anticipated. Overall, we saw lower installs largely due to labor constraints and interest rate pressure. While order activity has accelerated, we expect a moderate start to the fourth quarter in line with seasonal trends. In the US, the business is strong, supporting margins from a mix perspective. Early commentary we hear from our major marketers supported an expected improvement in bills for 2025 compared to this year, though we expect interest rates will continue to play a role in capital investment decisions for our major marketers. Outside of that, for paper recovery products, we're seeing good opportunities in China and elsewhere. We see solid activity in Mexico. We see significant potential in India where we have a strong relationship with a customer, executing a multiyear build project. In Q3, orders for our Fueling Segment were also up year-over-year in the high single digits. Sales in our Distribution segment were slightly up sequentially and year-over-year. While weather conditions have improved, the change was not material enough to generate pull-through demand we had anticipated. Given the wetter weather in the West earlier this year, customers have balanced drilling with accessing surface water. We're also continuing to face commodity pressures in the segment that have persisted over the last five quarters, largely around plastic pipe, where prices have decreased primarily due to supply dynamics rather than raw material costs. Despite these headwinds, we improved our operating margin on slightly higher sales due to strong execution from our distribution team. Just to briefly touch on the recent hurricanes affecting the Southeastern US, we did not see a material impact in the quarter. Though there were some temporary store closures for our distribution business, and we expect some customer projects to be delayed. We're very proud of our overall team in helping customers address clean water needs and supporting wastewater challenges through our relief efforts and ongoing initiatives to help our customers and our communities. As a result of lower-than-anticipated sales during the quarter and normalized demand expectations, we are lowering our full year guidance, which Jeff will provide more details on in his comments. And with that, I will now turn the call back over to Jeff.

Thanks, Joe. Overall, our third quarter was solid, but below our expectations. The Water Systems segment set new third quarter records meeting last year's record third quarter. Distribution delivered sales and operating income growth versus last year and sequentially, while Fueling segment results in higher SG&A costs across the company hurt our overall results. Our fully diluted earnings per share were $1.17 for the third quarter of 2024 versus $1.23 for the third quarter of 2023. Moving to Slide 7. Third quarter 2024 consolidated sales were $531.4 million, a year-over-year decrease of 1%. The sales decline in the third quarter was primarily due to lower volumes largely in our international Fueling business and large dewatering equipment to US fleet rental customers and the negative impact of foreign currency translation, partially offset by pockets of growth, price realization, and the incremental sales impact from recent acquisitions. Franklin Electric's consolidated gross profit was $189.7 million for the third quarter of 2024, a 2% year-over-year increase. The gross profit as a percentage of net sales was 35.7% in the third quarter of 2024, up 110 basis points versus 34.6% in the prior year. The gross profit margin was favorably impacted in 2024 by improved manufacturing productivity and utilization with fewer supply chain disruptions, lower freight costs, cost management across the company, and a favorable product mix shift. Selling, general, and administrative or SG&A expenses were $116.0 million in the third quarter of 2024 compared to $107.7 million in the third quarter of 2023. The increase in SG&A expense was primarily due to higher employee compensation costs, including incremental expenses associated with the company's CEO transition and the incremental expense impact from recent acquisitions. Consolidated operating income was $73.5 million in the third quarter of 2024, down $4.6 million or 6% from $78.1 million in the third quarter of 2023. The decrease in operating income was primarily due to higher SG&A costs. The third quarter 2024 operating income margin was 13.8% versus 14.5% of net sales in the third quarter of 2023. Moving to segment results on Slide 8. Water Systems sales in the US and Canada were up 1% compared to the third quarter of 2023. Sales of groundwater funding equipment increased 13%. Sales of water treatment products increased 9%, and the sales of all other surface pumping equipment increased 5%, all compared to 2023. Partially offsetting the increase, sales of large dewatering equipment decreased 31% compared to the third quarter of 2023. Water Systems sales in markets outside the US and Canada increased by 4% overall. Foreign currency translation decreased sales by 4%. Outside the US and Canada, sales in the third quarter of 2024 increased in all major markets, EMEA, Asia Pacific, and Latin America, excluding the impact of foreign currency translation. Water Systems operating income, a new third quarter record, was $52.8 million, up $0.1 million versus the third quarter 2023. The increase was primarily due to price realization, cost management and a favorable product and geographic sales mix shift. Operating income margin was 17.5%, a year-over-year decrease of 30 basis points. Distribution third quarter sales were $190.8 million versus third quarter 2023 sales of $189.2 million, an increase of 1%. The Distribution segment sales increase was driven by incremental sales impact from a recent acquisition, which favorably impacted net sales by 2%, partially offset by the negative impact of commodity pricing declines and unfavorable weather. The distribution segment's operating income was $12.2 million for the third quarter, a year-over-year increase of $1.5 million. Operating income margin was 6.4% of sales in the third quarter of 2024 versus 5.7% in the prior year. Fueling Systems sales in the third quarter were $69.7 million, a decrease of $8 million or 10% compared to the third quarter 2023. Fueling Systems sales in the US and Canada decreased 4% compared to the third quarter of 2023. Outside the US and Canada, Fueling Systems sales decreased 22%. These declines were due to lower volumes across most major product lines as we continue to have tougher sales comparisons in 2024 versus 2023 and sales in 2023 benefited from working off a very large sales backlog. Fueling Systems operating income was $24.1 million compared to $25.8 million in the third quarter of 2023. The third quarter 2024 operating income margin was 34.6% compared to 33.2% of net sales in the prior year. Operating income margins increased primarily due to improved manufacturing productivity, price realization, and cost management. The effective tax rate for the company was 23.6% for the quarter compared to 20.2% in the prior year quarter. This change in the effective tax rate had an impact on EPS of approximately $0.05. Moving to the balance sheet and cash flows on Slide 9. The company ended the third quarter of 2024 with a cash balance of $106.3 million and no borrowings outstanding under our revolving credit agreement. We generated $151.1 million in net cash flows from operating activities during the first nine months of 2024 versus $198.6 million in the first nine months of 2023. We are focused on improving cash flow and working capital requirements through managing inventory levels in addition to improvements in customer and vendor terms. Our priorities for capital allocation are covered on Slide 10. Aligning with that strategy, the company purchased about 92,000 shares of its common stock in the open market for approximately $8.7 million during the third quarter of 2024. At the end of the third quarter, the remaining share repurchase authorization is approximately 370,000 shares. Yesterday, the company announced a quarterly cash dividend of $0.25 that will be paid November 21 to shareholders of record as of November 7. Moving to Slide 7, taking into account our performance through the first nine months and specifically, our third quarter results as well as our typical seasonal sales pattern in the fourth quarter and higher expected SG&A expenses through the end of the year for the reasons described earlier. The company is lowering its full year sales guidance for 2024 to be approximately $2 billion and reducing its EPS guidance for the full year 2024 to be in the range of $3.75 to $3.85. Additionally, as Joe mentioned, we are currently taking actions to reduce costs across the company, including efforts to accelerate productivity. These restructuring activities are not complete at this time, but we expect to have better visibility by the end of the year through which we expect one-time restructuring charges could range between $3 million and $5 million for the fourth quarter. This estimate for restructuring charge is not included in the full year guidance previously provided.

Thanks, Jeff. In summary, while the results were lower than expectations, we're pleased with our team's performance and the resilience of the business. We're confident in our ability to overcome macroeconomic headwinds like those we encountered this year and deliver solid results. We're optimistic about our future. And as we execute our strategy, maintain our industry-leading service and bring the highest quality products to faster-growing verticals, our future looks bright. Thank you all for joining us today. And I'd now like to turn the call back over to Andrew for questions.

Our first question comes from Bryan Blair with Oppenheimer.

Thank you. Morning everyone. So, help us level set, I was hoping you could offer a little more detail on Q4 expectations by segment and recognizing you haven't provided 2025 guidance, but you have offered, I guess, some of the breadcrumbs to help us bridge the outlook, perhaps offer a little more color, high-level perspective on growth prospects and related puts and takes across Water systems distribution and fueling looking into next year?

Okay, there’s a lot to discuss, Bryan. Let me begin with our outlook for the fourth quarter, which aligns with our full-year expectations. We have now adjusted our guidance for the full year based on several factors. Importantly, we considered our third quarter results, which we’ve talked about. As we entered the second half of the year, we experienced a very wet first half, and we anticipated some pent-up demand to emerge in the latter half of the year. We expected improved weather conditions to contribute positively as we moved forward, and we did note a slight improvement as we entered the third quarter, although it wasn't significantly different from earlier months. In terms of statistics, the third quarter was the 102nd wettest out of the last 129 years in the US. We’re still seeing wet weather contributing to that pent-up demand, but it hasn’t translated into results as we had hoped, which impacted our performance in the third quarter. Looking ahead to the fourth quarter, we expect results to be similar to those of the third quarter. Year-over-year, the third quarter performance was comparable to last year's, and we believe the fourth quarter will follow a similar trend, which is reflected in our business outlook. If we break it down by segments, our perspective aligns with the overall company's outlook. We are seeing strength in our US operations, while international markets are under more pressure, as those economies aren’t faring as well as the US. We are also experiencing ongoing adverse effects from foreign currency translation outside the US. Within Water Systems, our large dewatering business has posed a significant challenge this year. When we compare sales of large dewatering equipment this year to last year, we expect a decline of approximately $60 million to $70 million. This is a considerable hurdle for the business. However, our teams have done an excellent job managing the other areas to mitigate this impact. As indicated by our third quarter results, sales increased slightly by about 1%, which is a commendable achievement given the challenges posed primarily by the large dewatering equipment for our US fleet clients. The other parts of the business have been performing very nice. They're stable. They're solid. They're up on a year-over-year basis, not up as much as we had expected and hoped, but they're still in a healthy territory. I think for Fueling, their year-over-year comp from the fourth quarter of last year was a much better comparison to what it was the first three quarters of this year. So, the fueling business, in our view, has normalized in terms of where those sales are. They've worked through those year-over-year comps where we were pulling down significant backlog in 2023. And so, we think that business is positioned to hold steady, and we'll see where it goes in 2025. Joe can talk about some of the outlook for 2025. And I think our customers with major marketers there have been generally positive. High level, I think we talked about some of the higher SG&A costs in the company. We've certainly got higher costs from CEO transition this year. That impact will only be a 2024 impact. We also, have two acquisitions that have added some SG&A into the business for the year. That will lap itself after the fourth quarter as well. And then last thing, I'll just make a comment on for the total company as we are seeing a higher tax rate this year than in 2023. This year, it's going to be approximately 23% for the tax rate for the year. That's related to a higher global minimum tax as well as fewer discretes that would benefit us, which we saw in the prior year.

Yes. Maybe, Bryan, just a couple of thoughts on 2025. Obviously, we're not sharing guidance at this point. But as I mentioned upfront, some of the headwinds in terms of housing sales, housing starts, the challenge with weather and working through a year that didn't make it easy for us. The business still performed relatively well. The teams have been working hard on some new products, getting our acquisitions integrated and bringing those products to our customers around the world. And I would say our expectation, the outlook for next year, definitely, there are some trends that we see. We obviously commented on some order rates here in the back half that are pointing to continued strong activity. I think if some of those macroeconomic headwinds and a few other areas, provide us some relief. I mean, we're cautiously optimistic about 2025. So, maybe I just stop there.

Understood. I appreciate all the insights. Your balance sheet is in very solid shape, exceeding 20% of your market cap and deal capacity. How is your M&A pipeline? How are you assessing the businesses you manage in terms of their readiness to deploy capital? Where do you see the need for some self-improvement versus readiness to move forward with inorganic growth?

Yes. I mean good question, and we're happy to have a healthy balance sheet. I think it puts us in a strong position as we look to 2025. That's our pipeline, we feel good about from an inorganic standpoint. Our focus right now and our thoughts are bringing more great products to our customers. The fact that we've got strong channel and good customer intimacy, I think, puts us in a good position to do that. And that focus on bringing those value-added products to our customers there. I look at some of the new products that we're developing and some of the ideas we have from an inorganic standpoint, and I've referred to a few times moving us to some faster-growing verticals, which we can see today in the residential, commercial, and industrial space. I would say we've got some great ideas. We're well in process of assessing and working on those, and we're excited about the position and the strength of our balance sheet to afford us that opportunity.

Our next question comes from the line of Ryan Connors with Northcoast Research.

Good morning. I wanted to approach this from the perspective of the order board because the press release mentioned some cautious remarks about order boards and tempered order activity, noting seasonality as a factor. However, Joe, your comments about the order patterns appear more positive during this call. Could you elaborate on that? While we understand there's seasonality in Q4, it seems that this would have been considered back in July when the last guidance was released. Therefore, there must be some aspects that are more challenging than anticipated. I'm looking for more insight into the order patterns across the businesses and how they relate to the guidance, while still providing some optimism for next year.

Yes, that's a good question, Ryan. One thing to note is that in the fourth quarter of last year, we saw a definite slowdown in order rates as we approached the end of the third quarter. As we compare year-over-year order rates, this lowers the bar for us this year, which is beneficial. However, due to last year's lower order rates, we did benefit from a backlog that we are working through as we progress in 2023. Consequently, some accelerating order rates may not immediately translate into increased revenue for each business. We are currently balancing this situation as we head toward the end of the year. In terms of overall order rates, many companies in the industrial sector are dealing with the challenges of channel and backlog normalization. We monitor these trends to gain insights into our business, which is why we mention them today. Although the backlog from last year provides a less substantial offset in light of the comparisons, these trends and certain aspects of our business indicate we could be well-positioned for growth in the coming year.

Yes, that’s very helpful. I would like to discuss the significant change in SG&A within our model. I understand the two main factors were the acquisition and the leadership transition. The latter is likely well understood, so I’m curious if you could quantify the relative impact of both factors. As we consider next year, it seems your key message is that SG&A will return to normal after this short-term spike. When you say SG&A will normalize, does that imply we will stabilize, or will we decrease significantly like the increase we've seen in the third quarter during the second half?

Yes. Thanks, Ryan. A couple of comments here on SG&A overall for the company. For the full year, the two pieces you mentioned there, the CEO transition and the incremental acquisitions. For CEO transition, the full year impact on 2024 is going to be in that $3 million to $3.5 million range total cost overall. And we didn't incur much of that, very little in Q2. That will be a Q3 and a Q4 impact for us for 2024, and then that will normalize in 2025. For the acquisitions, we're seeing about $1.5 million, $1.6 million in the third quarter was additional SG&A that came from those acquisitions. And so, if you just annualize that, you're going to be somewhere around $6 million of additional SG&A pickup, just north of $6 million for that. The other increases we've seen in SG&A, part of that is just coming from normal inflation, and we've got to continue to be competitive in compensation expenses for employees across the globe. Some economies outside the globe are seeing much higher rates of inflation than what we're seeing here in the US. Certainly, those numbers are coming through as well. Hopefully, somewhat offset by currency translation, but not fully covered by that impact there. And then we are continuing to make some strategic investments in areas where we want to grow and build and we expect that those investments will start to come through in 2025.

And to build on that, we've largely executed those investments. We're focusing on digital tools to simplify business interactions and making enhancements to our website, along with other initiatives that will mostly be completed as we approach 2025. We didn't achieve the growth we aimed for, which makes SG&A more noticeable. As you mentioned, most of these factors were anticipated, and we are managing our short-term costs to ensure we align them properly. This will allow us to reinvest in 2025. Our efforts are progressing well, and as Jeff pointed out, we still have work to do in Q4 to fully realize these changes.

Your next question comes from the line of Mike Halloran with Baird.

Good morning, everyone. So, a couple here. First, just can you talk to two things here, inventory levels through the water channel and similarly, how you're thinking about pricing through the water channels? Both on the headwater side and on the more traditional product side?

Yes, we can, Mike. I believe our inventory is in a good position; it's normalized. We have opportunities to continue reducing inventory, and we will do that through the fourth quarter as we typically do, in line with the seasonality we observe in the company. This will generate good cash flow by the end of the year. Our free cash flow for the first three quarters was 83%, and we anticipate that it will exceed 100% by year-end. Overall, inventory levels are generally normalized in both the Water Systems and Distribution businesses. They have also adjusted their inventory levels accordingly. The improvements in the supply chain, along with fewer disruptions and better product availability, have enabled us to rationalize and normalize our inventory. Regarding pricing in Water Systems, as it's a global business, each segment needs to be considered individually. However, we are seeing positive pricing in our Water business and our Distribution business for our engineered products, motors, drives, and controls. In distribution, we are experiencing negative pricing on commodity products, notably plastic pipe, which has seen price decreases in the low mid-single digits over several quarters. To manage this, we are focusing on reducing our inventory and speeding up turnover, so it's not in our warehouse as long as before. This strategy should help alleviate the negative impact, although we are still facing unfavorable pricing in that area.

And maybe just a comment on how we're thinking about that environment here as we go into next year. Our general view is price and productivity offset inflation, will probably lean heavier on productivity next year. I think pricing is a more normalized type environment as inflation settles a little bit, but we still expect labor inflation and other challenges. Obviously, we're in an interesting global time. So, we're looking at those levers. But probably a more normalized environment with some more measured price increases as we go into 2025.

Makes sense. Appreciate that. And then, Joe, I heard you really comment on kind of first impressions. But question is, you inherited a company that was in a good spot organizationally. And so, where is the focus for you from an iterative change perspective? Or where do you think different emphasis might come as you think about your early days with the company and what might shift a bit?

Absolutely. It's a great question, and I appreciate it. I'm very grateful to have joined such a strong and successful company. It's been enjoyable to spend the summer with Greg, traveling around the globe and meeting the team. Reflecting on our recent strategy review with the Board, I believe the opportunities before us are promising. I'm excited about our new products and the innovations we’re introducing. Our close customer relationships and new offerings, especially in electrification and efficiency with our variable frequency drives for industrial and residential applications, are impressive. Our current products like Q Drive and the upcoming HerQDrive, along with other IoT solutions in markets where we have already made our mark, highlight our commitment. Franklin is a relatively young player in the pump industry, but our reputation in groundwater is growing thanks to hard work and excellent products. I see similar opportunities in commercial, industrial, and residential sectors. I often emphasize the importance of focus and velocity to my team, urging us to identify key drivers and act swiftly. There are fantastic ideas and innovations within reach, and that’s where we will start. Drawing from my background in operations and supply chain, I'm keen on leveraging data and digital tools to better integrate the business, enhance planning, forecasting, and visibility. These will be key areas of focus for us, especially as market conditions may shift more quickly than anticipated. Franklin's unique capability to manufacture, produce, and distribute positions us well to take advantage of these circumstances.

Our next question comes from the line of Walter Liptak with Seaport Research.

Hi. Thanks. Good morning, Joe and Jeff. I wanted to ask about the fueling business. Joe, you mentioned that the projects with major retailers are looking decent for next year. Could you provide a bit more detail on how those projects compare in the US versus international markets? Additionally, what are the potential risks? Some of your competitors have mentioned labor risks and other factors that could impact fueling.

Yes, I appreciate the question. The US market has shown relative stability, although we've noticed some pullback in our international operations. Starting with the US, as a manufacturer and a significant user of labor worldwide, we've faced challenges related to labor constraints, particularly impacting our major marketers' build-outs. It's difficult to predict how this will evolve; however, we observe that the labor market is becoming less volatile as we head into 2025, especially following the post-COVID period. This trend provides us and our marketers with some confidence. Additionally, rising interest rates complicate larger capital investments, and while we can't predict the Federal Reserve's actions, the general outlook is tempered but remains optimistic. Our partnerships with major marketers are strong, and as they identify opportunities, we are prepared to support them. Overall, we feel positive about North America, though international markets present more challenges due to various disruptions. Nevertheless, I want to underscore Franklin's commitment to manufacturing and serving customers globally, which is reflected in our growth in Latin America, Europe, and APAC. We believe there are promising opportunities ahead, particularly in fueling, which we've emphasized in today's call.

Okay. Great. And I wanted to switch over to just the $3 million to $5 million of restructurings that you guys are doing. I don't really recall you guys doing restructurings in the past. So, I wonder if you could just provide some detail? Is this somehow across the board? Or is it strategic to different parts of the business? And just any color you can provide there?

Thanks, Will. Let me provide a bit more detail. As I mentioned in the prepared remarks, I can't go too deep into specifics since we are still working on several aspects and assessing opportunities. In the short term, one of our main priorities is to reduce discretionary costs across the company, which means we need to be more frugal given our current revenue situation. We are managing costs company-wide without focusing heavily on any particular area. We're being cautious about adding new expenses, especially in areas deemed non-essential, including limiting headcount. We are also exploring projects for optimizing our footprint in manufacturing and distribution, but I can't share much at this point since we are still evaluating our options. Additionally, we are looking for structural improvements to reduce costs that would positively affect our bottom line as we approach 2025. Overall, these are the key areas we are concentrating on.

Okay. Great. And then just the last one for me on a different topic altogether. Joe, you mentioned the hurricanes and that you didn't see any impact. Did you mean that there was no impact in the third quarter or that there was no impact in the fourth quarter as well?

Yes, I apologize if that was unclear. In the third quarter, we didn't experience much impact due to the timing. Typically, we face hurricanes every year. What was unique this time was how Helane moved inland. I want to highlight that our team did an excellent job providing volunteer service and supporting local customers and communities, ensuring our products were available. Generally, a hurricane will initially slow revenue but later create opportunities during recovery efforts. As we entered the fourth quarter, we did notice some slowdown, but we view that as a delay, and we believe it won't significantly affect our performance for the year.

Next question is a follow-up from Ryan Connors with Northcoast Research.

Thank you for the follow-up. I just wanted to clarify something regarding the housekeeping. The $3 million to $5 million in restructuring that you mentioned, Jeff, is not included in the guidance. Therefore, the guidance represents a non-GAAP figure, and we will be $3 million to $5 million lower than that in terms of GAAP net income. Is that the correct way to understand it?

That's correct, Ryan. Based on what actions we end up taking, yes.

Thanks, Andrew. I want to thank everyone for joining us today. We hope you all have a great week. We look forward to some good progress and to see you all again after the fourth quarter. Thanks, everyone.

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