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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
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 2 a20230725ex991earningsrele.htm EX-99.1 Document


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: Net Sales 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  %