8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 25, 2023

FRANKLIN ELECTRIC CO., INC.

(Exact name of registrant as specified in its charter)

Indiana	0-362	35-0827455
(State of incorporation)	(Commission File Number)	(IRS employer identification no.)

9255 Coverdale Road
Fort Wayne,	Indiana	46809
(Address of principal executive offices)		(Zip code)

(260) 824-2900

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.10 par value	FELE	NASDAQ	Global Select Market
(Title of each class)	(Trading symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition

On July 25, 2023, Franklin Electric Co., Inc. issued a press release announcing its earnings for the second quarter of 2023. A copy of the release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. This Current Report on Form 8-K and the press release attached hereto are being furnished pursuant to Item 2.02 of Form 8-K.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:

Exhibit Number	Description
99.1	Press release - "Franklin Electric Reports Record Second Quarter 2023 Results"
101	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
104	The cover page from this Current Report on Form 8-K, formatted as Inline XBRL

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FRANKLIN ELECTRIC CO., INC.

(Registrant)

Date: July 25, 2023	By	/s/ Jeffery L. Taylor
		Jeffery L. Taylor
		Vice President, Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-99.1

Exhibit 99.1

NEWS RELEASE FOR IMMEDIATE DISTRIBUTION

FRANKLIN ELECTRIC REPORTS RECORD SECOND QUARTER 2023 RESULTS

Second Quarter 2023 Highlights

•Consolidated net sales of $569.1 million, a new all-time quarterly record, was an increase of 3% over the prior year

•Water Systems and Distribution sales increased by 4% and 1%, respectively, while Fueling Systems sales decreased 7%

•Operating income was $80.9 million with healthy operating margin of 14.2%

•GAAP fully diluted earnings per share (EPS) was $1.27, a new record for any quarter

Fort Wayne, IN – July 25, 2023 – Franklin Electric Co., Inc. today announced its second quarter financial results for fiscal year 2023.

Second quarter 2023 net sales were $569.1 million, compared to second quarter 2022 net sales of $551.1 million.Second quarter 2023 operating income was $80.9 million, compared to second quarter 2022 operating income of $81.0 million.Second quarter 2023 EPS was $1.27, versus EPS in the second quarter 2022 of $1.26.

“We delivered another quarter of record sales and EPS performance for Franklin Electric. Results were driven by a solid demand environment that continued into the busy season for our core markets. Strong execution by our global teams enabled backlog and inventory levels to continue trending towards normalized levels, significantly improving our cash flow generation,” commented Gregg Sengstack, Franklin Electric’s Chairperson and Chief Executive Officer.

“Even though our second quarter sales were adversely impacted by weather and distributors right-sizing inventory levels, our end-market demand remains healthy. As we enter the third quarter, we have an elevated backlog which gives us momentum and confidence in our outlook for the remainder of 2023,” concluded Mr. Sengstack.

Segment Summaries

Water Systems net sales, a new all-time quarterly record, were $321.7 million in the second quarter 2023, an increase of $11.2 million compared to the second quarter 2022. Sales increases were led by pricing actions and continued strong end market demand for large pumps. Water Systems operating income in the second quarter 2023 was $50.8 million, a new quarterly record, driven by higher sales. Second quarter 2022 Water Systems operating income was $49.0 million.

Distribution net sales, a new second quarter record, were $193.1 million in the second quarter 2023, an increase of $2.0 million compared to the second quarter 2022. Sales increases were led by end market demand. The Distribution segment operating income was $17.8 million in the second quarter 2023 compared to second quarter 2022 operating income of $23.3 million. Distribution segment sales and operating income were negatively impacted by wet weather across much of the US, margin compression from declining pricing of commodity-based products sold through the business, and some channel inventory destocking as supply chains normalize.

Fueling Systems net sales were $80.4 million in the second quarter 2023, a decrease of $5.6 million compared to the second quarter 2022. Sales decreased in the U.S. and Canada by 6 percent and outside the U.S. and Canada by 8 percent. Fueling Systems operating income in the second quarter 2023 was

$26.7 million, a new second quarter record, driven by a favorable product and geographic mix of sales. Second quarter 2022 Fueling Systems operating income was $26.1 million.

2023 Guidance

The Company is maintaining its guidance for full year 2023 sales to be in the range of $2.15 billion to $2.25 billion and full year 2023 EPS to be in the range of $4.25 to $4.45.

Earnings Conference Call

A conference call to review earnings and other developments in the business will commence at 9:00 am ET. The second quarter 2023 earnings call will be available via a live webcast. The webcast will be available in a listen-only mode by going to:

https://edge.media-server.com/mmc/p/ykifmgrn

For those interested in participating in the question-and-answer portion of the call, please register for the call at the link below.

https://register.vevent.com/register/BId7ec20b8d1f5442687a9b4f54a3e54a8

All registrants will receive dial-in information and a PIN allowing them to access the live call. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).

A replay of the conference call will be available from Tuesday, July 25, 2023, through 9 am ET on Tuesday, August 1, 2023, by visiting the listen-only webcast link above.

Forward Looking Statements

"Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including those relating to market conditions or the Company’s financial results, costs, expenses or expense reductions, profit margins, inventory levels, foreign currency translation rates, liquidity expectations, business goals and sales growth, involve risks and uncertainties, including but not limited to, risks and uncertainties with respect to general economic and currency conditions, various conditions specific to the Company’s business and industry, weather conditions, new housing starts, market demand, competitive factors, changes in distribution channels, supply constraints, effect of price increases, raw material costs, technology factors, integration of acquisitions, litigation, government and regulatory actions, the Company’s accounting policies, future trends, epidemics and pandemics, and other risks which are detailed in the Company’s Securities and Exchange Commission filings, included in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2022, Exhibit 99.1 attached thereto and in Item 1A of Part II of the Company’s Quarterly Reports on Form 10-Q. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and the Company assumes no obligation to update any forward-looking statements.

About Franklin Electric

Franklin Electric is a global leader in the production and marketing of systems and components for the movement of water and fuel. Recognized as a technical leader in its products and services, Franklin Electric serves customers around the world in residential, commercial, agricultural, industrial, municipal, and fueling applications.

Franklin Electric Contact:

Jeffery L. Taylor

Franklin Electric Co., Inc.

260-824-2900

Email: jeffery.taylor@fele.com

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
	Second Quarter Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net sales	$	569,181	$	551,138	$	1,053,732	$	1,002,608
Cost of sales	380,700		361,850		702,986		667,986
Gross profit	188,481		189,288		350,746		334,622
Selling, general, and administrative expenses	107,429		108,313		216,964		212,986
Restructuring (income)/expense	149		(7)		273		713
Operating income	80,903		80,982		133,509		120,923
Interest expense	(4,178)		(2,932)		(7,325)		(4,426)
Other income/(expense), net	1,179		(1,159)		1,588		(1,537)
Foreign exchange expense	(3,571)		(329)		(5,615)		(914)
Income before income taxes	74,333		76,562		122,157		114,046
Income tax expense	14,173		16,799		24,421		24,164
Net income	$	60,160	$	59,763	$	97,736	$	89,882
Less: Net income attributable to noncontrolling interests	(560)		(399)		(811)		(753)
Net income attributable to Franklin Electric Co., Inc.	$	59,600	$	59,364	$	96,925	$	89,129
Earnings per share:
Basic	$	1.29	$	1.27	$	2.09	$	1.91
Diluted	$	1.27	$	1.26	$	2.06	$	1.89

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
	June 30, 2023		December 31, 2022
ASSETS
Cash and equivalents	$	53,227	$	45,790
Receivables (net)	299,485		230,404
Inventories	574,642		544,980
Other current assets	39,036		36,916
Total current assets	966,390		858,090
Property, plant, and equipment, net	224,464		215,154
Lease right-of-use assets, net	44,160		48,948
Goodwill and other assets	568,067		572,009
Total assets	$	1,803,081	$	1,694,201
LIABILITIES AND EQUITY
Accounts payable	$	161,266	$	139,266
Accrued expenses and other current liabilities	97,946		123,788
Current lease liability	13,624		15,959
Current maturities of long-term debt and short-term borrowings	159,841		126,756
Total current liabilities	432,677		405,769
Long-term debt	88,680		89,271
Long-term lease liability	29,513		32,858
Income taxes payable non-current	4,837		8,707
Deferred income taxes	32,434		29,744
Employee benefit plans	32,628		31,889
Other long-term liabilities	31,910		25,209
Redeemable noncontrolling interest	901		620
Total equity	1,149,501		1,070,134
Total liabilities and equity	$	1,803,081	$	1,694,201

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Six Months Ended
(In thousands)
	June 30, 2023		June 30, 2022
Cash flows from operating activities:
Net income	$	97,736	$	89,882
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	26,259		24,521
Non-cash lease expense	8,523		8,526
Share-based compensation	6,410		6,322
Other	7,896		3,639
Changes in assets and liabilities:
Receivables	(70,725)		(93,063)
Inventory	(24,125)		(123,817)
Accounts payable and accrued expenses	(3,880)		29,969
Operating leases	(8,706)		(8,526)
Income taxes-U.S. Tax Cuts and Jobs Act	(2,902)		(355)
Other	6,540		361
Net cash flows from operating activities	43,026		(62,541)
Cash flows from investing activities:
Additions to property, plant, and equipment	(20,241)		(20,084)
Proceeds from sale of property, plant, and equipment	—		6
Acquisitions and investments	(6,641)		(1,365)
Other investing activities	2		(8)
Net cash flows from investing activities	(26,880)		(21,451)
Cash flows from financing activities:
Net change in debt	32,171		126,272
Proceeds from issuance of common stock	9,010		1,916
Purchases of common stock	(25,541)		(30,644)
Dividends paid	(20,872)		(18,205)
Deferred payments for acquisitions	(186)		—
Net cash flows from financing activities	(5,418)		79,339
Effect of exchange rate changes on cash and cash equivalents	(3,291)		(2,658)
Net change in cash and cash equivalents	7,437		(7,311)
Cash and cash equivalents at beginning of period	45,790		40,536
Cash and cash equivalents at end of period	$	53,227	$	33,225

Key Performance Indicators:NetSales Summary

	Net Sales
(in millions)	United States & Canada			Latin America			Europe, Middle East & Africa			Asia Pacific			Total Water			Fueling			Distribution			Other/Elims			Consolidated
Q2 2022	$	194.9		$	41.7		$	49.7		$	24.2		$	310.5		$	86.0		$	191.1		$	(36.5)		$	551.1
Q2 2023	$	202.9		$	42.0		$	54.6		$	22.2		$	321.7		$	80.4		$	193.1		$	(26.1)		$	569.1
Change	$	8.0		$	0.3		$	4.9		$	(2.0)		$	11.2		$	(5.6)		$	2.0		$	10.4		$	18.0
% Change	4		%	1		%	10		%	(8)		%	4		%	(7)		%	1		%				3		%
Foreign currency translation	$	(1.2)		$	(4.9)		$	(5.3)		$	(1.2)		$	(12.6)		$	(0.1)		$	—					$	(12.7)
% Change	(1)		%	(12)		%	(11)		%	(5)		%	(4)		%	—		%	—		%				(2)		%
Volume/Price	$	9.2		$	5.2		$	10.2		$	(0.8)		$	23.8		$	(5.5)		$	2.0		$	10.4		30.7
% Change	5		%	12		%	21		%	(3)		%	8		%	(6)		%	1		%	(28)		%	6		%

Key Performance Indicators: Operating Income and Margin Summary

Operating Income and Margins
(in millions)	For the Second Quarter 2023
	Water			Fueling			Distribution			Other/Elims		Consolidated
Operating Income/(Loss)	$	50.8		$	26.7		$	17.8		$	(14.4)	$	80.9
% Operating Income To Net Sales	15.8		%	33.2		%	9.2		%			14.2		%
Operating Income and Margins
(in millions)	For the Second Quarter 2022
	Water			Fueling			Distribution			Other/Elims		Consolidated
Operating Income/(Loss)	$	49.0		$	26.1		$	23.3		$	(17.4)	$	81.0
% Operating Income To Net Sales	15.8		%	30.3		%	12.2		%			14.7		%

XML

Cover	Jul. 25, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Jul. 25, 2023
Entity Registrant Name	FRANKLIN ELECTRIC CO., INC.
Entity Incorporation, State or Country Code	IN
Entity File Number	0-362
Entity Tax Identification Number	35-0827455
Entity Address, Address Line One	9255 Coverdale Road
Entity Address, City or Town	Fort Wayne,
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46809
City Area Code	260
Local Phone Number	824-2900
Entity Information, Former Legal or Registered Name	Not Applicable
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.10 par value
Trading Symbol	FELE
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0000038725
Amendment Flag	false