10-Q 1 fele-20240930.htm 10-Q fele-20240930
00000387252024Q3false--12-31iso4217:USDxbrli:sharesxbrli:sharesiso4217:USDxbrli:pureiso4217:EUR00000387252024-01-012024-09-3000000387252024-10-2500000387252024-07-012024-09-3000000387252023-07-012023-09-3000000387252023-01-012023-09-3000000387252024-09-3000000387252023-12-3100000387252022-12-3100000387252023-09-300000038725us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember2023-10-012023-12-310000038725us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember2023-12-310000038725us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember2024-01-012024-03-310000038725fele:HydropompeSrlMember2023-03-310000038725us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember2023-01-012023-03-310000038725us-gaap:FairValueMeasurementsRecurringMember2024-09-300000038725us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-09-300000038725us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-09-300000038725us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-09-300000038725us-gaap:FairValueMeasurementsRecurringMember2023-12-310000038725us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000038725us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000038725us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000038725us-gaap:AcquisitionRelatedCostsMember2024-06-300000038725us-gaap:AcquisitionRelatedCostsMember2023-12-310000038725us-gaap:AcquisitionRelatedCostsMember2024-07-012024-09-300000038725us-gaap:AcquisitionRelatedCostsMember2024-01-012024-09-300000038725us-gaap:AcquisitionRelatedCostsMember2024-09-300000038725us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-09-300000038725us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310000038725us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-09-300000038725us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310000038725us-gaap:EquitySwapMemberus-gaap:NondesignatedMember2024-07-012024-09-300000038725us-gaap:EquitySwapMemberus-gaap:NondesignatedMember2024-09-300000038725us-gaap:EquitySwapMemberus-gaap:NondesignatedMember2023-12-310000038725us-gaap:EquitySwapMemberus-gaap:NondesignatedMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2024-07-012024-09-300000038725us-gaap:EquitySwapMemberus-gaap:NondesignatedMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2024-01-012024-09-300000038725us-gaap:EquitySwapMemberus-gaap:NondesignatedMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2023-07-012023-09-300000038725us-gaap:EquitySwapMemberus-gaap:NondesignatedMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-09-300000038725us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2024-09-300000038725us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2023-12-310000038725us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:ForeignCurrencyGainLossMember2024-07-012024-09-300000038725us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:ForeignCurrencyGainLossMember2024-01-012024-09-300000038725us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:ForeignCurrencyGainLossMember2023-07-012023-09-300000038725us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:ForeignCurrencyGainLossMember2023-01-012023-09-300000038725us-gaap:CustomerRelationshipsMember2024-09-300000038725us-gaap:CustomerRelationshipsMember2023-12-310000038725us-gaap:PatentsMember2024-09-300000038725us-gaap:PatentsMember2023-12-310000038725us-gaap:TechnologyBasedIntangibleAssetsMember2024-09-300000038725us-gaap:TechnologyBasedIntangibleAssetsMember2023-12-310000038725us-gaap:TradeNamesMember2024-09-300000038725us-gaap:TradeNamesMember2023-12-310000038725us-gaap:OtherIntangibleAssetsMember2024-09-300000038725us-gaap:OtherIntangibleAssetsMember2023-12-310000038725us-gaap:TradeNamesMember2024-09-300000038725us-gaap:TradeNamesMember2023-12-310000038725fele:WaterSystemsMember2023-12-310000038725fele:FuelingSystemsMember2023-12-310000038725fele:DistributionMember2023-12-310000038725fele:WaterSystemsMember2024-01-012024-09-300000038725fele:FuelingSystemsMember2024-01-012024-09-300000038725fele:DistributionMember2024-01-012024-09-300000038725fele:WaterSystemsMember2024-09-300000038725fele:FuelingSystemsMember2024-09-300000038725fele:DistributionMember2024-09-300000038725us-gaap:PensionPlansDefinedBenefitMember2024-01-012024-09-300000038725us-gaap:PensionPlansDefinedBenefitMember2024-07-012024-09-300000038725us-gaap:PensionPlansDefinedBenefitMember2023-07-012023-09-300000038725us-gaap:PensionPlansDefinedBenefitMember2023-01-012023-09-300000038725us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2024-01-012024-09-300000038725us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2024-07-012024-09-300000038725us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2023-07-012023-09-300000038725us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2023-01-012023-09-300000038725fele:NewYorkLifeInvestorsLLCMember2024-09-300000038725fele:NewYorkLifeInvestorsLLCMember2023-12-310000038725us-gaap:RevolvingCreditFacilityMember2024-09-300000038725us-gaap:RevolvingCreditFacilityMember2023-12-310000038725us-gaap:ConstructionLoansMember2024-09-300000038725us-gaap:ConstructionLoansMember2023-12-310000038725us-gaap:ForeignLineOfCreditMember2024-09-300000038725us-gaap:ForeignLineOfCreditMember2023-12-310000038725fele:PrudentialFinancialMember2024-05-150000038725fele:PrudentialFinancialMember2024-05-140000038725fele:NewYorkLifeInvestorsLLCMember2024-05-150000038725fele:NewYorkLifeInvestorsLLCMember2024-05-140000038725us-gaap:RevolvingCreditFacilityMember2023-10-012023-12-310000038725us-gaap:BankOverdraftsMember2024-09-300000038725us-gaap:BankOverdraftsMember2023-12-310000038725us-gaap:CommonStockMember2024-06-300000038725us-gaap:AdditionalPaidInCapitalMember2024-06-300000038725us-gaap:RetainedEarningsMember2024-06-300000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-300000038725us-gaap:NoncontrollingInterestMember2024-06-300000038725fele:ParentandNoncontrollingInterestMember2024-06-3000000387252024-06-300000038725us-gaap:RetainedEarningsMember2024-07-012024-09-300000038725us-gaap:NoncontrollingInterestMember2024-07-012024-09-300000038725fele:ParentandNoncontrollingInterestMember2024-07-012024-09-300000038725us-gaap:CommonStockMember2024-07-012024-09-300000038725us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-012024-09-300000038725us-gaap:CommonStockMember2024-09-300000038725us-gaap:AdditionalPaidInCapitalMember2024-09-300000038725us-gaap:RetainedEarningsMember2024-09-300000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-09-300000038725us-gaap:NoncontrollingInterestMember2024-09-300000038725fele:ParentandNoncontrollingInterestMember2024-09-300000038725us-gaap:CommonStockMember2023-06-300000038725us-gaap:AdditionalPaidInCapitalMember2023-06-300000038725us-gaap:RetainedEarningsMember2023-06-300000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000038725us-gaap:NoncontrollingInterestMember2023-06-300000038725fele:ParentandNoncontrollingInterestMember2023-06-3000000387252023-06-300000038725us-gaap:RetainedEarningsMember2023-07-012023-09-300000038725us-gaap:NoncontrollingInterestMember2023-07-012023-09-300000038725fele:ParentandNoncontrollingInterestMember2023-07-012023-09-300000038725us-gaap:CommonStockMember2023-07-012023-09-300000038725us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000038725us-gaap:CommonStockMember2023-09-300000038725us-gaap:AdditionalPaidInCapitalMember2023-09-300000038725us-gaap:RetainedEarningsMember2023-09-300000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000038725us-gaap:NoncontrollingInterestMember2023-09-300000038725fele:ParentandNoncontrollingInterestMember2023-09-300000038725us-gaap:CommonStockMember2023-12-310000038725us-gaap:AdditionalPaidInCapitalMember2023-12-310000038725us-gaap:RetainedEarningsMember2023-12-310000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310000038725us-gaap:NoncontrollingInterestMember2023-12-310000038725fele:ParentandNoncontrollingInterestMember2023-12-310000038725us-gaap:RetainedEarningsMember2024-01-012024-09-300000038725us-gaap:NoncontrollingInterestMember2024-01-012024-09-300000038725fele:ParentandNoncontrollingInterestMember2024-01-012024-09-300000038725us-gaap:CommonStockMember2024-01-012024-09-300000038725us-gaap:AdditionalPaidInCapitalMember2024-01-012024-09-300000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-09-300000038725us-gaap:CommonStockMember2022-12-310000038725us-gaap:AdditionalPaidInCapitalMember2022-12-310000038725us-gaap:RetainedEarningsMember2022-12-310000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000038725us-gaap:NoncontrollingInterestMember2022-12-310000038725fele:ParentandNoncontrollingInterestMember2022-12-310000038725us-gaap:RetainedEarningsMember2023-01-012023-09-300000038725us-gaap:NoncontrollingInterestMember2023-01-012023-09-300000038725fele:ParentandNoncontrollingInterestMember2023-01-012023-09-300000038725us-gaap:CommonStockMember2023-01-012023-09-300000038725us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300000038725us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300000038725us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2023-12-310000038725us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2023-12-310000038725us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-12-310000038725us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2024-01-012024-09-300000038725us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2024-01-012024-09-300000038725us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2024-01-012024-09-300000038725us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2024-09-300000038725us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2024-09-300000038725us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2024-09-300000038725us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2022-12-310000038725us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2022-12-310000038725us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2022-12-310000038725us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2023-01-012023-09-300000038725us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2023-01-012023-09-300000038725us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-01-012023-09-300000038725us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2023-09-300000038725us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2023-09-300000038725us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-09-300000038725fele:UnitedStatesCanadaMemberfele:WaterSystemsMember2024-07-012024-09-300000038725fele:UnitedStatesCanadaMemberfele:WaterSystemsMember2023-07-012023-09-300000038725fele:UnitedStatesCanadaMemberfele:WaterSystemsMember2024-01-012024-09-300000038725fele:UnitedStatesCanadaMemberfele:WaterSystemsMember2023-01-012023-09-300000038725srt:LatinAmericaMemberfele:WaterSystemsMember2024-07-012024-09-300000038725srt:LatinAmericaMemberfele:WaterSystemsMember2023-07-012023-09-300000038725srt:LatinAmericaMemberfele:WaterSystemsMember2024-01-012024-09-300000038725srt:LatinAmericaMemberfele:WaterSystemsMember2023-01-012023-09-300000038725us-gaap:EMEAMemberfele:WaterSystemsMember2024-07-012024-09-300000038725us-gaap:EMEAMemberfele:WaterSystemsMember2023-07-012023-09-300000038725us-gaap:EMEAMemberfele:WaterSystemsMember2024-01-012024-09-300000038725us-gaap:EMEAMemberfele:WaterSystemsMember2023-01-012023-09-300000038725srt:AsiaPacificMemberfele:WaterSystemsMember2024-07-012024-09-300000038725srt:AsiaPacificMemberfele:WaterSystemsMember2023-07-012023-09-300000038725srt:AsiaPacificMemberfele:WaterSystemsMember2024-01-012024-09-300000038725srt:AsiaPacificMemberfele:WaterSystemsMember2023-01-012023-09-300000038725fele:UnitedStatesCanadaMemberus-gaap:IntersegmentEliminationMemberfele:WaterSystemsMember2024-07-012024-09-300000038725fele:UnitedStatesCanadaMemberus-gaap:IntersegmentEliminationMemberfele:WaterSystemsMember2023-07-012023-09-300000038725fele:UnitedStatesCanadaMemberus-gaap:IntersegmentEliminationMemberfele:WaterSystemsMember2024-01-012024-09-300000038725fele:UnitedStatesCanadaMemberus-gaap:IntersegmentEliminationMemberfele:WaterSystemsMember2023-01-012023-09-300000038725us-gaap:OperatingSegmentsMemberfele:WaterSystemsMember2024-07-012024-09-300000038725us-gaap:OperatingSegmentsMemberfele:WaterSystemsMember2023-07-012023-09-300000038725us-gaap:OperatingSegmentsMemberfele:WaterSystemsMember2024-01-012024-09-300000038725us-gaap:OperatingSegmentsMemberfele:WaterSystemsMember2023-01-012023-09-300000038725fele:UnitedStatesCanadaMemberfele:DistributionMember2024-07-012024-09-300000038725fele:UnitedStatesCanadaMemberfele:DistributionMember2023-07-012023-09-300000038725fele:UnitedStatesCanadaMemberfele:DistributionMember2024-01-012024-09-300000038725fele:UnitedStatesCanadaMemberfele:DistributionMember2023-01-012023-09-300000038725fele:UnitedStatesCanadaMemberus-gaap:IntersegmentEliminationMemberfele:DistributionMember2024-07-012024-09-300000038725fele:UnitedStatesCanadaMemberus-gaap:IntersegmentEliminationMemberfele:DistributionMember2023-07-012023-09-300000038725fele:UnitedStatesCanadaMemberus-gaap:IntersegmentEliminationMemberfele:DistributionMember2024-01-012024-09-300000038725fele:UnitedStatesCanadaMemberus-gaap:IntersegmentEliminationMemberfele:DistributionMember2023-01-012023-09-300000038725us-gaap:OperatingSegmentsMemberfele:DistributionMember2024-07-012024-09-300000038725us-gaap:OperatingSegmentsMemberfele:DistributionMember2023-07-012023-09-300000038725us-gaap:OperatingSegmentsMemberfele:DistributionMember2024-01-012024-09-300000038725us-gaap:OperatingSegmentsMemberfele:DistributionMember2023-01-012023-09-300000038725fele:UnitedStatesCanadaMemberfele:FuelingSystemsMember2024-07-012024-09-300000038725fele:UnitedStatesCanadaMemberfele:FuelingSystemsMember2023-07-012023-09-300000038725fele:UnitedStatesCanadaMemberfele:FuelingSystemsMember2024-01-012024-09-300000038725fele:UnitedStatesCanadaMemberfele:FuelingSystemsMember2023-01-012023-09-300000038725fele:AllOtherMemberfele:FuelingSystemsMember2024-07-012024-09-300000038725fele:AllOtherMemberfele:FuelingSystemsMember2023-07-012023-09-300000038725fele:AllOtherMemberfele:FuelingSystemsMember2024-01-012024-09-300000038725fele:AllOtherMemberfele:FuelingSystemsMember2023-01-012023-09-300000038725us-gaap:IntersegmentEliminationMemberfele:FuelingSystemsMember2024-07-012024-09-300000038725us-gaap:IntersegmentEliminationMemberfele:FuelingSystemsMember2023-07-012023-09-300000038725us-gaap:IntersegmentEliminationMemberfele:FuelingSystemsMember2024-01-012024-09-300000038725us-gaap:IntersegmentEliminationMemberfele:FuelingSystemsMember2023-01-012023-09-300000038725us-gaap:OperatingSegmentsMemberfele:FuelingSystemsMember2024-07-012024-09-300000038725us-gaap:OperatingSegmentsMemberfele:FuelingSystemsMember2023-07-012023-09-300000038725us-gaap:OperatingSegmentsMemberfele:FuelingSystemsMember2024-01-012024-09-300000038725us-gaap:OperatingSegmentsMemberfele:FuelingSystemsMember2023-01-012023-09-300000038725fele:CorporateAndEliminationsMember2024-07-012024-09-300000038725fele:CorporateAndEliminationsMember2023-07-012023-09-300000038725fele:CorporateAndEliminationsMember2024-01-012024-09-300000038725fele:CorporateAndEliminationsMember2023-01-012023-09-300000038725fele:ConsolidatedMember2024-07-012024-09-300000038725fele:ConsolidatedMember2023-07-012023-09-300000038725fele:ConsolidatedMember2024-01-012024-09-300000038725fele:ConsolidatedMember2023-01-012023-09-300000038725us-gaap:OperatingSegmentsMemberfele:WaterSystemsMember2024-09-300000038725us-gaap:OperatingSegmentsMemberfele:WaterSystemsMember2023-12-310000038725us-gaap:OperatingSegmentsMemberfele:DistributionMember2024-09-300000038725us-gaap:OperatingSegmentsMemberfele:DistributionMember2023-12-310000038725us-gaap:OperatingSegmentsMemberfele:FuelingSystemsMember2024-09-300000038725us-gaap:OperatingSegmentsMemberfele:FuelingSystemsMember2023-12-310000038725fele:CorporateAndEliminationsMember2024-09-300000038725fele:CorporateAndEliminationsMember2023-12-310000038725us-gaap:DamagesFromProductDefectsMemberus-gaap:PendingLitigationMemberfele:EssoSAFMember2024-01-012024-09-300000038725us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember2024-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________

FORM 10-Q
_________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
logoa08.jpg
Commission file number 0-362
 
FRANKLIN ELECTRIC CO., INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0827455
(State or other jurisdiction of incorporation or organization) (I.R.S. 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, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.10 par valueFELENASDAQ Global Select Market
(Title of each class)(Trading symbol)(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YesNo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
No

1


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer Accelerated FilerNon-Accelerated FilerSmaller Reporting Company
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
YesNo

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
  Outstanding at
Class of Common Stock Par Value October 25, 2024
$0.10 45,687,354 shares




2


FRANKLIN ELECTRIC CO., INC.
TABLE OF CONTENTS
Page
PART I.FINANCIAL INFORMATIONNumber
Item 1.
Item 2.
Item 3.
Item 4.
 
PART II.OTHER INFORMATION 
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.
 



 

3


PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Third Quarter EndedNine Months Ended
(In thousands, except per share amounts)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Net sales$531,438 $538,431 $1,535,596 $1,592,163 
Cost of sales341,775 352,178 982,556 1,055,164 
Gross profit189,663 186,253 553,040 536,999 
Selling, general, and administrative expenses115,998 107,687 352,290 324,651 
Restructuring expense139 462 139 735 
Operating income73,526 78,104 200,611 211,613 
Interest expense(1,556)(2,984)(4,980)(10,309)
Other (expense) income, net(181)277 709 1,865 
Foreign exchange income (expense), net88 (2,483)(5,228)(8,098)
Income before income taxes71,877 72,914 191,112 195,071 
Income tax expense16,983 14,746 43,795 39,167 
Net income$54,894 $58,168 $147,317 $155,904 
Less: Net income attributable to noncontrolling interests(298)(370)(663)(1,181)
Net income attributable to Franklin Electric Co., Inc.$54,596 $57,798 $146,654 $154,723 
Earnings per share:
Basic$1.19 $1.25 $3.18 $3.34 
Diluted$1.17 $1.23 $3.14 $3.29 

See Notes to Condensed Consolidated Financial Statements.
4








FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
Third Quarter EndedNine Months Ended
(In thousands)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Net income$54,894 $58,168 $147,317 $155,904 
Other comprehensive income/(loss), before tax:
     Foreign currency translation adjustments8,706 (10,851)(8,808)138 
     Employee benefit plan activity553 513 1,706 1,623 
Other comprehensive income/(loss)9,259 (10,338)(7,102)1,761 
Income tax expense related to items of other comprehensive income/(loss)(137)(128)(423)(405)
Other comprehensive income/(loss), net of tax9,122 (10,466)(7,525)1,356 
Comprehensive income64,016 47,702 139,792 157,260 
Less: Comprehensive income attributable to noncontrolling interests(383)(294)(692)(1,141)
Comprehensive income attributable to Franklin Electric Co., Inc.$63,633 $47,408 $139,100 $156,119 


See Notes to Condensed Consolidated Financial Statements.
































5








FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)September 30, 2024December 31, 2023
ASSETS 
Current assets: 
Cash and cash equivalents$106,273 $84,963 
Receivables, less allowances of $3,871 and $3,594, respectively
272,003 222,418 
Inventories:
Raw material173,354 176,706 
Work-in-process28,894 26,880 
Finished goods322,399 305,110 
Total inventories524,647 508,696 
Other current assets39,560 37,718 
Total current assets942,483 853,795 
Property, plant, and equipment, at cost: 
Land and buildings165,359 167,028 
Machinery and equipment322,113 316,227 
Furniture and fixtures59,211 56,997 
Other64,900 59,747 
Property, plant, and equipment, gross611,583 599,999 
Less: Allowance for depreciation(385,511)(370,260)
Property, plant, and equipment, net226,072 229,739 
Lease right-of-use assets, net62,694 57,014 
Deferred income taxes9,558 8,758 
Intangible assets, net217,253 230,027 
Goodwill341,092 342,404 
Other assets8,091 6,385 
Total assets$1,807,243 $1,728,122 



6








September 30, 2024December 31, 2023
LIABILITIES AND EQUITY 
Current liabilities: 
Accounts payable$173,935 $152,419 
Accrued expenses and other current liabilities115,795 100,249 
Current lease liability17,963 17,316 
Income taxes9,070 4,700 
Current maturities of long-term debt and short-term borrowings76,402 12,355 
Total current liabilities393,165 287,039 
Long-term debt11,581 88,056 
Long-term lease liability43,484 38,549 
Income taxes payable non-current 4,837 
Deferred income taxes31,128 29,461 
Employee benefit plans30,781 35,973 
Other long-term liabilities23,219 33,914 
Commitments and contingencies (see Note 15)
Redeemable noncontrolling interest1,179 1,145 
Shareholders' equity:
Common stock (65,000 shares authorized, $.10 par value) outstanding (45,687 and 46,067, respectively)
4,569 4,607 
Additional paid-in capital360,092 344,717 
Retained earnings1,133,650 1,078,512 
Accumulated other comprehensive loss(228,668)(221,114)
Total shareholders' equity1,269,643 1,206,722 
Noncontrolling interest3,063 2,426 
Total equity1,272,706 1,209,148 
Total liabilities and equity$1,807,243 $1,728,122 

See Notes to Condensed Consolidated Financial Statements.


7








FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
(In thousands)September 30, 2024September 30, 2023
Cash flows from operating activities: 
Net income$147,317 $155,904 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization41,825 39,582 
Non-cash lease expense15,223 12,664 
Share-based compensation10,127 8,449 
Deferred income taxes350 2,305 
(Gain)/loss on disposals of plant and equipment(400)491 
Foreign exchange expense5,228 8,098 
Changes in assets and liabilities, net of acquisitions:
Receivables(51,440)(20,427)
Inventory(18,760)2,537 
Accounts payable and accrued expenses17,218 4,376 
Operating leases(15,700)(12,847)
Income taxes1,718 (2,667)
Income taxes-U.S. Tax Cuts and Jobs Act(3,870)(2,902)
Employee benefit plans(315)603 
Other, net2,565 2,463 
Net cash flows from operating activities151,086 198,629 
Cash flows from investing activities:
Additions to property, plant, and equipment(28,897)(30,155)
Proceeds from sale of property, plant, and equipment704  
Cash paid for acquisitions, net of cash acquired(1,151)(6,641)
Other, net37 26 
Net cash flows from investing activities(29,307)(36,770)
Cash flows from financing activities:
Proceeds from issuance of debt267,539 381,789 
Repayments of debt(280,016)(469,442)
Proceeds from issuance of common stock5,269 9,010 
Purchases of common stock(56,989)(29,888)
Dividends paid(35,442)(31,315)
Deferred payments for acquisitions(348)(448)
Net cash flows from financing activities(99,987)(140,294)
Effect of exchange rate changes on cash and cash equivalents(482)(4,848)
Net change in cash and cash equivalents21,310 16,717 
Cash and cash equivalents at beginning of period84,963 45,790 
Cash and cash equivalents at end of period$106,273 $62,507 
8








Non-cash items: 
Additions to property, plant, and equipment, not yet paid$931 $519 
Right-of-Use Assets obtained in exchange for new operating lease liabilities$23,137 $5,685 
Payable to sellers of acquired entities$1,300 $382 
Non-cash investment to acquire property in lieu of cash payment for products provided$ $419 
Accrued dividends payable to noncontrolling interest$ $821 
Payable for share repurchases$ $890 
See Notes to Condensed Consolidated Financial Statements. 
9








FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

10








NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated balance sheet as of December 31, 2023, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements as of September 30, 2024, and for the third quarters and nine months ended September 30, 2024 and September 30, 2023 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all accounting entries and adjustments (including normal, recurring adjustments) considered necessary for a fair presentation of the financial position and the results of operations for the interim periods have been made. Operating results for the third quarter and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024. For further information, including a description of the critical accounting policies of Franklin Electric Co., Inc. (the "Company"), refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

2. ACCOUNTING PRONOUNCEMENTS
Accounting Standards Issued But Not Yet Adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 is intended to improve reportable segment disclosure requirements, primarily through additional and more detailed information about a reportable segment's expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. The Company plans to adopt this ASU for its fiscal year end December 31, 2024 disclosures, but does not anticipate the adoption to have a material impact on the Company's financial disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. This amendment modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, (2) the amount of income taxes paid (net of refunds received) (disaggregated by federal, state, and foreign taxes) as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid net of refunds, (3) the income or loss from continuing operations before income tax expense or benefit (disaggregated between domestic and foreign) and (4) income tax expense or benefit from continuing operations (disaggregated by federal, state and foreign). ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 should be applied on a prospective basis, while retrospective application is permitted. The Company will adopt this ASU in 2025 and does not anticipate the adoption to have material impact on the Company's financial disclosures.

3. ACQUISITIONS
2023
During the fourth quarter ended December 31, 2023, the Company acquired substantially all of the assets of Aqua Systems of Fort Myers, a water treatment systems distributor. In another separate transaction, the Company acquired substantially all of the assets of Action Manufacturing and Supply, Inc., a water treatment equipment provider located in southwest Florida. The Company also acquired, in a separate transaction, substantially all of the assets of LCA Pump, LLC, which operates Water Works Pump, a Missouri based professional groundwater distributor. The combined purchase price for the acquisitions in the fourth quarter of 2023, was $36.0 million, including contingent consideration with an estimated fair value of $4.3 million, after purchase price adjustments based on the level of working capital acquired. In the first quarter of 2024, the Company recorded a measurement period adjustment of $1.3 million to increase the acquisition-date fair value of the contingent consideration transferred. The measurement period adjustment resulted in an increase to acquired identifiable intangible assets of $2.3 million and a reduction to acquired goodwill of $1.0 million. The measurement period adjustments did not have a significant impact on the Company’s results of operations. The fair value of the assets acquired and liabilities assumed for the above acquisitions is preliminary as of September 30, 2024.

During the first quarter ended March 31, 2023, the Company acquired all of the assets of Phil-Good Products, Inc. ("Phil-Good"). Phil-Good is an injection molded plastics component manufacturer. In another separate transaction in the first quarter of 2023, the Company acquired 100 percent of the ownership interests of Hydropompe S.r.l. ("Hydropompe"). Hydropompe is a pump manufacturer with a focus in dewatering and sewage products. The combined, all-cash purchase price for both
11








acquisitions in the first quarter of 2023 was $8.7 million after purchase price adjustments based on the level of working capital acquired. The fair value of the assets acquired and liabilities assumed for both acquisitions was final as of March 31, 2024.

The Company has not presented separate results of operations of the acquired companies since the closing of the acquisitions or combined pro forma financial information of the Company and the acquired interests as the results of operations for all 2023 acquisitions are immaterial.

Transaction costs were expensed as incurred under the guidance of FASB Accounting Standards Codification Topic 805, Business Combinations and were insignificant for all periods presented.

4. FAIR VALUE MEASUREMENTS
FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, provides guidance for defining, measuring, and disclosing fair value within an established framework and hierarchy. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard established a fair value hierarchy which requires an entity to maximize the use of observable inputs and to minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value within the hierarchy are as follows:

Level 1 – Quoted prices for identical assets and liabilities in active markets;
Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As of September 30, 2024 and December 31, 2023, the assets and liabilities measured at fair value on a recurring basis were as set forth in the table below:
 
 
 
(In millions)
September 30, 2024Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents$5.9 $5.9 $ $ 
Share swap transaction2.2 2.2   
Total assets$8.1 $8.1 $ $ 
Liabilities:
Contingent payments related to acquisition4.8   4.8 
Total liabilities$4.8 $ $ $4.8 
(In millions)December 31, 2023Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents$10.9 $10.9 $ $ 
Share swap transaction1.1 1.1   
Total assets$12.0 $12.0 $ $ 
Liabilities:
Contingent payments related to acquisition$3.0 $ $ $3.0 
Total liabilities$3.0 $ $ $3.0 


12








The Company’s Level 1 cash equivalents assets are generally comprised of foreign bank guaranteed certificates of deposit and short term deposits. The share swap transaction asset is recorded within the "Receivables" line of the condensed consolidated balance sheets and is further described in Note 5 - Financial Instruments.

The Company's Level 3 category includes contingent consideration related to acquisitions, which valuation inputs are unobservable and significant to the fair value measurement. Projections and estimated probabilities are used to estimate future contingent earn-out payments, which are discounted back to present value to compute contingent earn-out liabilities. The following table provides a roll-forward of the contingent consideration liability, which is included in "Other long-term liabilities" as of December 31, 2023 and "Accrued expenses and other current liabilities" as of September 30, 2024 in the condensed consolidated balance sheets:
Third Quarter EndedNine Months Ended
(In millions)September 30, 2024September 30, 2024
Fair value at beginning of period$4.6 $3.0 
Adjustments to prior year acquisition 1.3 
Change in fair value recognized in earnings0.2 0.5 
Payments  
Fair value at end of period$4.8 $4.8 

Total debt, including current maturities, have carrying amounts of $88.0 million and $100.5 million and estimated fair values of $86.9 million and $98.6 million as of September 30, 2024 and December 31, 2023, respectively. In the absence of quoted prices in active markets, considerable judgment is required in developing estimates of fair value. Estimates are not necessarily indicative of the amounts the Company could realize in a current market transaction. In determining the fair value of its debt, the Company uses estimates based on rates currently available to the Company for debt with similar terms and remaining maturities. Accordingly, the fair value of debt is classified as Level 2 within the valuation hierarchy.

5. FINANCIAL INSTRUMENTS
The Company’s non-employee directors' deferred compensation stock program is subject to variable plan accounting and, accordingly, is adjusted for changes in the Company’s stock price at the end of each reporting period. The Company has entered into share swap transaction agreements (the "swap") to mitigate the Company’s exposure to the fluctuations in the Company's stock price. The swap has not been designated as a hedge for accounting purposes and is cancellable with 30 days' written notice by either party. As of September 30, 2024 and December 31, 2023, the swap had a notional value based on 240,000 shares. For the third quarter and nine months ended September 30, 2024, changes in the fair value of the swap resulted in gains of $1.7 million, and $0.9 million, respectively. For the third quarter and nine months ended September 30, 2023, changes in the fair value of the swap resulted in a loss of $3.6 million and a gain of $1.1 million, respectively. Gains and losses resulting from the swap were largely offset by gains and losses on the fair value of the deferred compensation stock liability. All gains or losses and expenses related to the swap are recorded in the Company's condensed consolidated statements of income within the “Selling, general, and administrative expenses” line.

The Company is exposed to foreign currency exchange rate risk arising from transactions in the normal course of business including making sales and purchases of raw materials and finished goods in foreign denominated currencies with third party customers and suppliers as well as to wholly owned subsidiaries of the Company. To reduce its exposure to foreign currency exchange rate volatility, the Company enters into various forward currency contracts to offset these fluctuations. The Company uses forward currency contracts only in an attempt to limit underlying exposure from foreign currency exchange rate fluctuations and to minimize earnings volatility associated with foreign currency exchange rate fluctuations and has not elected to use hedge accounting. Decisions on whether to use such derivative instruments are primarily based on the amount of exposure to the currency involved and an assessment of the near-term market value for each currency. As of September 30, 2024, the Company had a notional amount of $31.4 million in forward currency contracts outstanding and the related fair value of those contracts was not material. As of December 31, 2023, the Company had no foreign currency contracts outstanding. For the third quarter and nine months ended September 30, 2024, changes in the fair value of the forward currency contracts resulted in losses of $0.6 million and $0.9 million, respectively. For the third quarter and nine months ended September 30, 2023, changes in the fair value of the forward currency contracts resulted in gains of $0.0 million and $1.6 million, respectively. These gains and losses are recorded in the Company's condensed consolidated statements of income within the "Foreign exchange income (expense), net" line.



13








6. GOODWILL AND OTHER INTANGIBLE ASSETS
The carrying amounts of the Company’s intangible assets, excluding goodwill, are as follows:
(In millions)September 30, 2024December 31, 2023
 Gross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Amortizing intangibles:    
Customer relationships$264.3 $(126.6)$263.7 $(115.5)
Patents7.3 (7.3)7.3 (7.3)
Technology7.5 (7.5)7.5 (7.5)
Trade names44.2 (7.7)44.1 (5.8)
Other3.2 (2.6)3.4 (2.8)
Total$326.5 $(151.7)$326.0 $(138.9)
Non-amortizing intangibles:    
Trade names42.5 — 42.9 — 
Total intangibles$369.0 $(151.7)$368.9 $(138.9)
 
Amortization expense related to intangible assets for the third quarters ended September 30, 2024 and September 30, 2023 was $4.7 million and $4.2 million, respectively, and for the nine months ended September 30, 2024 and September 30, 2023 was $14.2 million and $12.7 million, respectively.

The change in the carrying amount of goodwill by reportable segment for the nine months ended September 30, 2024 is as follows:
(In millions)
Water SystemsFueling SystemsDistributionConsolidated
Balance as of December 31, 2023$221.4 $70.4 $50.6 $342.4 
Adjustments to prior year acquisitions(0.9) (0.1)(1.0)
Foreign currency translation(0.4)0.1  (0.3)
Balance as of September 30, 2024$220.1 $70.5 $50.5 $341.1 

7. EMPLOYEE BENEFIT PLANS
The following table sets forth the aggregated net periodic benefit cost for all pension plans for the third quarters and nine months ended September 30, 2024 and September 30, 2023:
(In millions)Pension Benefits
Third Quarter EndedNine Months Ended
 September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Service cost$0.2 $0.2 $0.5 $0.5 
Interest cost1.6 1.7 4.7 5.0 
Expected return on assets(1.9)(1.8)(5.7)(5.4)
Amortization of:
Prior service cost    
Actuarial loss0.5 0.5 1.7 1.6 
Settlement cost    
Net periodic benefit cost$0.4 $0.6 $1.2 $1.7 






14








The following table sets forth the aggregated net periodic benefit cost for the other post-retirement benefit plan for the third quarters and nine months ended September 30, 2024 and September 30, 2023:
(In millions)Other Benefits
Third Quarter EndedNine Months Ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Service cost$ $ $ $ 
Interest cost0.1 0.1 0.2 0.2 
Expected return on assets    
Amortization of:
Prior service cost    
Actuarial loss    
Settlement cost    
Net periodic benefit cost$0.1 $0.1 $0.2 $0.2 

8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of:
(In millions)September 30, 2024December 31, 2023
Salaries, wages, and commissions$47.0 $45.9 
Product warranty costs9.3 9.3 
Insurance2.4 2.5 
Employee benefits18.3 13.8 
Other38.8 28.7 
Total$115.8 $100.2 

9. INCOME TAXES
The Company’s effective tax rate for the nine-month period ended September 30, 2024 was 22.9 percent as compared to 20.1 percent for the nine-month period ended September 30, 2023. The effective tax rate differs from the U.S. statutory rate of 21 percent primarily due to state taxes and foreign earnings taxed at rates higher than the U.S. statutory rate partially offset by the recognition of the U.S. foreign-derived intangible income (FDII) provisions and certain discrete events including excess tax benefits from share-based compensation. For the third quarter of 2024, the effective tax rate was 23.6 percent compared to 20.2 percent for the third quarter of 2023.

The increase in the effective tax rate for the third quarter and first nine months of 2024 compared to the comparable periods in the prior year was a result of less favorable discrete events in 2024, primarily related to excess tax benefits from share-based compensation, in addition to an increase in the rate on foreign earnings with the implementation of the European Union’s Pillar Two Directive.

10. DEBT
Debt consisted of the following:
(In millions)September 30, 2024December 31, 2023
New York Life Agreement$75.0 $75.0 
Credit Agreement 11.0 
Tax increment financing debt12.8 14.1 
Foreign subsidiary debt0.3 0.5 
Less: unamortized debt issuance costs(0.1)(0.1)
$88.0 $100.5 
Less: current maturities(76.4)(12.4)
Long-term debt$11.6 $88.1 


15









Prudential Agreement
The Company maintains the Fourth Amended and Restated Note Purchase and Private Shelf Agreement (the "Prudential Agreement") with PGIM, Inc. and its affiliates. On May 15, 2024, the Company entered into Amendment No. 1 that increased the total available facility amount from lenders to $250.0 million from $150.0 million and changed the expiration date from July 30, 2024 to May 15, 2027.

New York Life Agreement
The Company maintains an uncommitted and unsecured private shelf agreement with NYL Investors LLC and its affiliates (the "New York Life Agreement"). On May 15, 2024, the Company entered into Amendment No. 1 that increased the total available facility amount from lenders to $250.0 million from $200.0 million and changed the expiration date from July 30, 2024 to May 15, 2027.

Credit Agreement
As of September 30, 2024, the Company had no outstanding borrowings, $4.6 million in letters of credit outstanding, and $345.4 million of available capacity under its credit agreement. As of December 31, 2023, the Company had $11.0 million outstanding borrowings with a weighted-average interest rate of 6.3 percent, $3.6 million in letters of credit outstanding, and $335.4 million of available capacity under its credit agreement.

The Company also has overdraft lines of credit for certain subsidiaries with various expiration dates. The aggregate maximum borrowing capacity of these overdraft lines of credits is $17.6 million. As of September 30, 2024, there were no outstanding borrowings and $17.6 million of available capacity under these lines of credit. As of December 31, 2023, there were $17.9 million overdraft lines of credit with no outstanding borrowings and $17.9 million of available capacity under these lines of credit.

11. EARNINGS PER SHARE
The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company's participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders.

Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards.

The following table sets forth the computation of basic and diluted earnings per share:
Third Quarter EndedNine Months Ended
(In millions, except per share amounts)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Numerator:  
Net income attributable to Franklin Electric Co., Inc.$54.6 $57.8 $146.7 $154.7 
Less: Earnings allocated to participating securities0.2 0.2 0.5 0.5 
Net income available to common shareholders$54.4 $57.6 $146.2 $154.2 
Denominator:  
Basic weighted average common shares outstanding45.7 46.2 45.9 46.2 
Effect of dilutive securities:  
Non-participating employee stock options, performance awards, and deferred shares to non-employee directors0.6 0.7 0.6 0.7 
Diluted weighted average common shares outstanding46.3 46.9 46.5 46.9 
Basic earnings per share$1.19 $1.25 $3.18 $3.34 
Diluted earnings per share$1.17 $1.23 $3.14 $3.29 

16








There were 0.1 million stock options outstanding for the third quarters and nine months ended September 30, 2024 and September 30, 2023, that were excluded from the computation of diluted earnings per share, as their inclusion would be anti-dilutive.
17








12. EQUITY ROLL FORWARD
The schedules below set forth equity changes in the third quarters and nine months ended September 30, 2024 and September 30, 2023:
(In thousands) Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Noncontrolling InterestTotal EquityRedeemable Noncontrolling Interest
Balance as of July 1, 2024$4,575 $356,016 $1,099,285 $(237,705)$2,725 $1,224,896 $1,134 
Net income— — 54,596 — 252 54,848 46 
Dividends on common stock ($0.250/share)
— — (11,462)— — (11,462)— 
Common stock issued2 965 — — — 967 — 
Common stock repurchased (9)— (8,769)— — (8,778)— 
Share-based compensation1 3,111 — — — 3,112 — 
Currency translation adjustment— — — 8,621 86 8,707 (1)
Pension and other post retirement plans, net of taxes— — — 416 — 416 — 
Balance as of September 30, 2024$4,569 $360,092 $1,133,650 $(228,668)$3,063 $1,272,706 $1,179 
(In thousands)Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Noncontrolling InterestTotal EquityRedeemable Noncontrolling Interest
Balance as of July 1, 2023$4,626 $340,812 $1,020,883 $(219,662)$2,842 $1,149,501 $901 
Net income— — 57,798 — 234 58,032 136 
Dividends on common stock ($0.225/share)
— — (10,443)— — (10,443)— 
Common stock repurchased(6)— (5,231)— — (5,237)— 
Share-based compensation1 2,038 — — — 2,039 — 
Dividend to noncontrolling interest(821)(821)— 
Currency translation adjustment— — — (10,775)(74)(10,849)(2)
Pension and other post retirement plans, net of taxes— — — 385 — 385 — 
Balance as of September 30, 2023$4,621 $342,850 $1,063,007 $(230,052)$2,181 $1,182,607 $1,035 




18








(In thousands)Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Noncontrolling InterestTotal EquityRedeemable Noncontrolling Interest
Balance as of December 31, 2023$4,607 $344,717 $1,078,512 $(221,114)$2,426 $1,209,148 $1,145 
Net Income— — 146,654 — 607 147,261 56 
Dividends on common stock ($0.750/share)
— — (34,586)— — (34,586)— 
Common stock issued9 5,260 — — — 5,269 — 
Common stock repurchased(59)— (56,930)— — (56,989)— 
Share-based compensation12 10,115 — — — 10,127 — 
Dividend to noncontrolling interest— — — — —  (21)
Currency translation adjustment— — — (8,837)30 (8,807)(1)
Pension and other post retirement plans, net of taxes— — — 1,283 — 1,283 — 
Balance as of September 30, 2024$4,569 $360,092 $1,133,650 $(228,668)$3,063 $1,272,706 $1,179 
(In thousands)Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Noncontrolling InterestTotal EquityRedeemable Noncontrolling Interest
Balance as of December 31, 2022$4,619 $325,426 $969,261 $(231,448)$2,276 $1,070,134 $620 
Net Income— — 154,723 — 764 155,487 417 
Dividends on common stock ($0.675/share)
— — (31,315)— — (31,315)— 
Common stock issued22 8,988 — — — 9,010 — 
Common stock repurchased(33)— (29,662)— — (29,695)— 
Share-based compensation13 8,436 — — — 8,449 — 
Dividend to noncontrolling interest(821)(821)
Currency translation adjustment— — — 178 (38)140 (2)
Pension and other post retirement plans, net of taxes— — — 1,218 — 1,218 — 
Balance as of September 30, 2023$4,621 $342,850 $1,063,007 $(230,052)$2,181 $1,182,607 $1,035 
19








13. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
Changes in accumulated other comprehensive income/(loss) by component for the nine months ended September 30, 2024 and September 30, 2023, are summarized below:
(In millions)Foreign Currency Translation Adjustments
Pension and Post-Retirement Plan Benefit Adjustments (2)
Total
For the nine months ended September 30, 2024:
Balance as of December 31, 2023$(179.3)$(41.8)$(221.1)
Other comprehensive income/(loss) before reclassifications(8.8) (8.8)
Amounts reclassified from accumulated other comprehensive income/(loss) (1)
 1.3 1.3 
Net other comprehensive income/(loss)(8.8)1.3 (7.5)
Balance as of September 30, 2024$(188.1)$(40.5)$(228.6)
For the nine months ended September 30, 2023:
Balance as of December 31, 2022$(191.3)$(40.1)$(231.4)
Other comprehensive income/(loss) before reclassifications0.2  0.2 
Amounts reclassified from accumulated other comprehensive income/(loss) (1)
 1.2 1.2 
Net other comprehensive income/(loss)0.2 1.2 1.4 
Balance as of September 30, 2023$(191.1)$(38.9)$(230.0)

(1) This accumulated other comprehensive income/(loss) component is included in the computation of net periodic pension cost (refer to Note 7 for additional details) and is included in the "Other (expense) income, net" line of the Company's condensed consolidated statements of income.

(2) Net of tax expense of $0.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Amounts related to noncontrolling interests were not material.

14. SEGMENT AND GEOGRAPHIC INFORMATION
The accounting policies of the operating segments are the same as those described in Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Revenue is recognized based on the invoice price at the point in time when the customer obtains control of the product, which is typically upon shipment to the customer. The Water and Fueling segments include manufacturing operations and supply certain components and finished goods, both between segments and to the Distribution segment. The Company reports these product transfers between Water and Fueling as inventory transfers as a significant number of the Company's manufacturing facilities are shared across segments for scale and efficiency purposes. The Company reports intersegment transfers from Water to Distribution as intersegment revenue at market prices to properly reflect the commercial arrangement of vendor to customer that exists between the Water and Distribution segments.

Segment operating income is a key financial performance measure. Operating income by segment is based on net sales less identifiable operating expenses and allocations and includes profits recorded on sales to other segments of the Company. 




20








Financial information by reportable business segment is included in the following summary:
Third Quarter EndedNine Months Ended
(In millions)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Net sales
Water Systems
External sales
United States & Canada$152.3 $157.7 $448.0 $494.0 
Latin America43.5 45.5 126.6 127.8 
Europe, Middle East & Africa53.4 48.7 161.7 153.7 
Asia Pacific21.7 19.6 66.1 60.6 
Intersegment sales
United States & Canada31.3 24.3 102.0 88.0 
Total sales302.2 295.8 904.4 924.1 
Distribution
External sales
United States & Canada190.8 189.2 528.3 525.3 
Intersegment sales    
Total sales190.8 189.2 528.3 525.3 
Fueling Systems
External sales
United States & Canada55.1 58.5 160.2 172.8 
All other14.6 19.2 44.7 58.0 
Intersegment sales    
Total sales69.7 77.7 204.9 230.8 
Intersegment Eliminations/Other(31.3)(24.3)(102.0)(88.0)
Consolidated$531.4 $538.4 $1,535.6 $1,592.2 
Third Quarter EndedNine Months Ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Operating income/(loss)
Water Systems$52.8 $52.7 $162.3 $152.5 
Distribution12.2 10.7 23.8 33.2 
Fueling Systems24.1 25.8 68.9 73.3 
Intersegment Eliminations/Other(15.6)(11.1)(54.4)(47.4)
Consolidated$73.5 $78.1 $200.6 $211.6 

September 30, 2024December 31, 2023
Total assets
Water Systems$1,052.1 $1,044.4 
Distribution398.0 365.6 
Fueling Systems255.6 256.4 
Other101.5 61.7 
Consolidated$1,807.2 $1,728.1 

21








Other Assets are generally Corporate assets that are not allocated to the segments and are comprised primarily of cash and property, plant and equipment.

15. COMMITMENTS AND CONTINGENCIES
In 2011, the Company became aware of a review of alleged issues with certain underground piping connections installed in filling stations in France owned by the French Subsidiary of Exxon Mobile, Esso S.A.F. A French court ordered that a designated, subject-matter expert review 103 filling stations to determine what, if any, damages are present and the cause of those damages. The Company has participated in this investigation since 2011, along with several other third parties including equipment installers, engineering design firms who designed and provided specifications for the stations, and contract manufacturers of some of the installed equipment. In May 2022, the subject-matter expert issued its final report, which indicates that total damages incurred by Esso amounted to approximately 9.5 million Euro. It is the Company’s position that its products were not the cause of any alleged damage. The Company submitted its response to the expert's final report in February 2023. The Company cannot predict the ultimate outcome of this matter. If payments result from a resolution of this matter, depending on the amount, they could have a material effect on the Company’s financial position, results of operations, or cash flows.

The Company is defending other various claims and legal actions which have arisen in the ordinary course of business. In the opinion of management, based on current knowledge of the facts and after discussion with counsel, these claims and legal actions can be defended or resolved without a material effect on the Company’s financial position, results of operations, and net cash flows.

At September 30, 2024, the Company had $12.1 million of commitments primarily for capital expenditures and purchase of raw materials to be used in production and finished goods.

At September 30, 2024, the Company has a contingent consideration liability with an estimated fair value of $4.8 million that could result in a payment of up to $5.0 million if a future profitability milestone is achieved.

The changes in the carrying amount of the warranty accrual, as recorded in the "Accrued expenses and other current liabilities" line of the Company's condensed consolidated balance sheet for the nine months ended September 30, 2024, are as follows:
(In millions)
Balance as of December 31, 2023$9.3 
Accruals related to product warranties10.0 
Reductions for payments made(10.0)
Balance as of September 30, 2024$9.3 


22








ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Third Quarter 2024 vs. 2023

OVERVIEW
Net sales in the third quarter and first nine months of 2024 decreased 1 percent and 4 percent, respectively, from the prior-year periods. The sales decreases in the third quarter and first nine months of 2024 were primarily due to lower volumes and the negative impact of foreign currency translation, partially offset by price realization and the incremental sales impact from recent acquisitions. The Company's consolidated gross profit was $189.7 million and $553.0 million, respectively, for the third quarter and first nine months of 2024, increases of $3.4 million and $16.0 million, respectively, from the prior-year periods. Diluted earnings per share was $1.17 and $3.14, respectively, for the third quarter and first nine months of 2024, decreases of $0.06 and $0.15, respectively, from the prior-year periods.

RESULTS OF OPERATIONS

Net Sales
Net sales in the third quarter and first nine months of 2024 were $531.4 million and $1.5 billion, respectively, and decreased 1 percent and 4 percent as compared to the prior-year periods. Sales were negatively impacted by changes in foreign exchange rates, principally due to the strengthening of the U.S. Dollar relative to the Argentine Peso and Turkish Lira. However, the Company increases prices in the local currency to offset the impact of currency devaluation in the Argentina and Turkey hyperinflationary economies. As a result, the net negative impact of foreign currency exchange rates on net sales was 1 percent in the third quarter and first nine months of 2024 compared to the same periods in the prior year.

Net Sales
(In millions)Q3 2024Q3 2023
2024 v 2023
Water Systems$302.2 $295.8 $6.4 
Fueling Systems69.7 77.7 (8.0)
Distribution190.8 189.2 1.6 
Eliminations/Other(31.3)(24.3)(7.0)
Consolidated$531.4 $538.4 $(7.0)

Net Sales
(In millions)YTD September 30, 2024YTD September 30, 2023
2024 v 2023
Water Systems$904.4 $924.1 $(19.7)
Fueling Systems204.9 230.8 (25.9)
Distribution528.3 525.3 3.0 
Eliminations/Other(102.0)(88.0)(14.0)
Consolidated$1,535.6 $1,592.2 $(56.6)

Net Sales-Water Systems
Water Systems net sales increased 2 percent in the third quarter but decreased 2 percent in the first nine months of 2024, as compared to the prior-year periods. The sales growth in the third quarter was primarily due to higher volumes and price realization. The sales decline in the first nine months of 2024 was primarily due to lower volumes, which decreased due to weaker end market demand for large dewatering equipment. Sales decreased 2 percent in the third quarter and 1 percent in the first nine months of 2024 due to the negative impact from foreign exchange rates, as compared to prior-year periods. The incremental sales impact from a recent acquisition favorably impacted sales 2 percent in the third quarter and first nine months of 2024.

Water Systems net sales in the U.S. and Canada increased 1 percent in the third quarter but decreased 5 percent in the first nine months of 2024, as compared to the prior-year periods. In the third quarter of 2024, sales of groundwater pumping equipment increased 13 percent, sales of water treatment products increased 9 percent, and the sales of all other surface pumping
23








equipment increased 5 percent compared to 2023. Partially offsetting the increase, sales of large dewatering equipment decreased 31 percent compared to 2023. In the first nine months of 2024, sales of large dewatering equipment decreased 43 percent, sales of water treatment products increased 12 percent, sales of all other surface pumping equipment increased 5 percent and sales of groundwater pumping equipment increased 3 percent compared to 2023.

Water Systems net sales in markets outside the U.S. and Canada increased 4 percent in both the third quarter and the first nine months of 2024, as compared to the prior-year periods. Sales decreased 4 percent in the third quarter and 3 percent in the first nine months of 2024 due to the negative impact from foreign exchange rates, as compared to prior-year periods. In both the third quarter and first nine months of 2024, excluding the impact of foreign currency translation, sales increased in all three major regions: EMEA, Latin America and Asia Pacific.

Net Sales-Fueling Systems
Fueling Systems net sales decreased 10 percent in the third quarter and 11 percent in the first nine months of 2024, as compared to the prior-year periods. These sales declines were primarily due to lower volumes.

Fueling Systems net sales in the U.S. and Canada decreased 4 percent in the third quarter and 6 percent in the first nine months of 2024, as compared to the prior-year periods. Outside the U.S. and Canada, Fueling Systems net sales decreased 22 percent in both the third quarter and first nine months of 2024, as compared to the prior-year periods. The decreases were across all product lines.

Net Sales - Distribution
Distribution net sales increased 1 percent in both the third quarter and first nine months of 2024, as compared to the prior-year periods. The Distribution segment sales increased due to the incremental sales impact from a recent acquisition which favorably impacted net sales by 2 percent in the third quarter and first nine months of 2024, partially offset by the negative impact of commodity pricing declines and unfavorable weather.

Gross Profit and Expenses Ratios
Three Months Ended September 30,
(In Millions)2024% of Net Sales2023% of Net Sales
Gross Profit$189.7 35.7 %$186.3 34.6 %
Selling, General and Administrative Expense116.0 21.8 %107.7 20.0 %
Nine Months Ended September 30,
(In Millions)2024% of Net Sales2023% of Net Sales
Gross Profit$553.0 36.0 %$537.0 33.7 %
Selling, General and Administrative Expense352.3 22.9 %324.7 20.4 %

Gross Profit
The gross profit margin ratio was 35.7 percent and 36.0 percent in the third quarter and first nine months of 2024, respectively, and 34.6 percent and 33.7 percent in the third quarter and first nine months of 2023, respectively. The gross profit margin was favorably impacted in the third quarter and first nine months of 2024 by cost management, including lower freight costs in Water Systems and Fueling Systems, and a favorable product and geographic sales mix shift.

Selling, General, and Administrative ("SG&A")
SG&A expenses were $116.0 million in the third quarter and $352.3 million in the first nine months of 2024 compared to $107.7 million in the third quarter and $324.7 million in the first nine months of 2023. SG&A expenses increased in the third quarter and first nine months of 2024 primarily due to higher employee compensation costs, including incremental expenses associated with the Company’s CEO transition, and the incremental expense impact of recent acquisitions. The SG&A expenses ratio was 21.8 percent and 22.9 percent in the third quarter and first nine months of 2024, respectively, and 20.0 percent and 20.4 percent in the third quarter and first nine months of 2023, respectively.

Restructuring Expenses
Restructuring expenses were $0.1 million in the third quarter and first nine months of 2024, respectively, and $0.5 million and $0.7 million in the third quarter and first nine months of 2023, respectively. Restructuring expenses were primarily from continued miscellaneous manufacturing realignment activities, branch closings and consolidations.

24








Operating Income
Operating income decreased 6 percent and 5 percent in the third quarter and first nine months of 2024, as compared to the prior-year periods.
Operating income (loss)
(In millions)Q3 2024Q3 2023
2024 v 2023
Water Systems$52.8 $52.7 $0.1 
Fueling Systems24.1 25.8 (1.7)
Distribution12.2 10.7 1.5 
Eliminations/Other(15.6)(11.1)(4.5)
Consolidated$73.5 $78.1 $(4.6)

Operating income (loss)
(In millions)YTD September 30, 2024YTD September 30, 2023
2024 v 2023
Water Systems$162.3 $152.5 $9.8