FRANKLIN ELECTRIC CO INC
For the period ended Mar 31, 2026. Filed Apr 29, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Apr 29, 2026
FELE$94.17-1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-30.
0000038725-25-000178
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-29.
0000038725-26-000026
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 67 previous paragraphs and 64 current paragraphs.
33 unchanged; 15 reworded; 16 added; 19 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
First Quarter 2026 vs. 2025
Current report
Net sales in the first quarter of 2026 increased 10 percent from the first quarter of last year. The sales increase was primarily due to higher sales volumes and price realization in all three segments. The Company's consolidated gross profit was $175.0 million for the first quarter of 2026, an increase of $11.1 million from the prior year’s first quarter. The gross profit as a percent of net sales was 35.0 percent in the first quarter of 2026 compared to 36.0 percent in the first quarter of 2025. Diluted earnings per share for the first quarter of 2026 was $0.77, an increase of $0.10, or 15 percent, from the first quarter of 2025 diluted earnings per share of $0.67.
Current report
Net sales in the first quarter of 2026 were $500.4 million, an increase of $45.2 million or 10 percent compared to 2025 first quarter sales of $455.2 million. The sales increase was primarily due to higher sales volumes and price realization of 6 percent, positive impact of foreign exchange rates of 2 percent, and incremental sales impact from recent acquisitions of 2 percent.
Current report
Water Systems net sales were $318.0 million in the first quarter of 2026, an increase of $30.7 million or 11 percent compared to the first quarter of 2025 net sales of $287.3 million. The sales increase was due to higher sales volumes and price realization, the positive impact of foreign exchange rates, and the incremental sales impact from recent acquisitions.
Current report
Energy Systems net sales were $71.8 million in the first quarter of 2026, an increase of $5.0 million or 7 percent compared to the first quarter of 2025 net sales of $66.8 million. The sales increase was primarily due to higher volumes and price realization.
Current report
Distribution net sales were $150.9 million in the first quarter of 2026, an increase of $9.0 million or 6 percent compared to the first quarter of 2025 net sales of $141.9 million. The Distribution segment sales increase was primarily due to higher volumes and price realization. Sales increased less than 1 percent in the first quarter due to the incremental sales impact from recent acquisitions.
Current report
The gross profit margin ratio was 35.0 percent in 2026 and 36.0 percent in first quarter of 2025. The gross profit margin was unfavorably impacted in the first quarter of 2026 by higher material costs, primarily tariff costs, and an unfavorable product and geographic sales mix shift.
Current report
Operating income was $48.1 million in the first quarter of 2026, an increase of $4.0 million or 9 percent from $44.1 million in the first quarter of 2025.
Current report
Water Systems operating income was $44.4 million in the first quarter of 2026, an increase of $1.0 million compared to the first quarter of 2025. Operating income increased in Water Systems primarily due to higher sales. The first quarter operating income margin was 14.0 percent, a decrease of 110 basis points from 15.1 percent in the first quarter 2025. Operating income margin decreased primarily due to restructuring charges and higher tariff costs.
Current report
Energy Systems operating income was $24.2 million in the first quarter of 2026, an increase of $2.3 million compared to the first quarter of 2025. Operating income increased in Energy Systems primarily due to higher sales. The first quarter operating income margin was 33.7 percent, an increase of 90 basis points from 32.8 percent in the first quarter of 2025. Operating income margin increased primarily due to leverage on SG&A cost from higher sales.
Current report
Distribution operating income was $3.0 million in the first quarter of 2026, an increase of $0.9 million compared to the first quarter of 2025. Operating income increased primarily due to higher sales. The first quarter operating income margin was 2.0 percent, an increase of 50 basis points from 1.5 percent in the first quarter of 2025. Operating income margin improved due to leverage on SG&A cost from higher sales.
Current report
Interest expense was $2.3 million in the first quarter of 2026 and $1.8 million in the first quarter of 2025, respectively.
Current report
Other income or expense was a loss in the first quarter of 2026 of $0.4 million and a gain of $0.8 million in the first quarters of 2025, respectively.
Current report
Foreign Exchange income (expense), net
Current report
Net income for the first quarter of 2026 was $34.7 million compared to the prior year first quarter net income of $31.4 million. Net income attributable to Franklin Electric Co., Inc. for the first quarter of 2026 was $34.3 million, or $0.77 per diluted share, compared to the prior year first quarter net income attributable to Franklin Electric Co., Inc. of $31.0 million, or $0.67 per diluted share.
Current report
The Company has a firm, non‑cancellable purchase commitment with a vendor for copper with an aggregate remaining obligation of approximately $4.0 million, expected to be fulfilled within the next year.
Removed paragraphs (19)
Previous report
In the third quarter of 2025, the Company completed the process of settling the Franklin Electric Co,, Inc. Pension Plan resulting in a third quarter of 2025 pre-tax pension settlement charge of $55.3 million related to actuarial losses previously recorded in Accumulated Other Comprehensive Loss. Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for additional information on the pension settlement loss.
Previous report
Third Quarter 2025 vs. 2024
Previous report
Net sales in the third quarter and first nine months of 2025 were $581.7 million and $1.6 billion, respectively, and increased 9 percent and 6 percent, respectively, as compared to the prior-year periods. The sales increases were due to higher volumes, price realization, and the incremental sales impact from recent acquisitions. The Company's consolidated gross profit was $208.7 million and $584.4 million, respectively, for the third quarter and first nine months of 2025, increases of 10 percent and 6 percent, respectively, from the prior-year periods. Diluted earnings per share was $0.37 and $1.17, respectively, for the third quarter and first nine months of 2025, decreases of $0.80 and $0.79, respectively, from the prior-year periods. The third quarter and first nine months of 2025 were negatively impacted by the pension settlement loss of $41.7 million net of tax benefit ($55.3 million gross of tax benefit) million related to actuarial losses previously recorded in Accumulated Other Comprehensive Loss. Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for additional information on the pension settlement loss.
Previous report
Net sales in the third quarter and first nine months of 2025 were $581.7 million and $1.6 billion, respectively, and increased 9 percent and 6 percent, respectively, as compared to the prior-year periods. Sales in the third quarter and the first nine months of 2025 from recent acquisitions were approximately 3 percent and 2 percent, respectively. Sales increased less than 1 percent in the third quarter and decreased 1 percent in the first nine months of 2025 due to the impact from foreign exchange rates, as compared to prior-year periods.
Previous report
Water Systems net sales increased 11 percent in the third quarter and 7 percent in the first nine months of 2025, as compared to the prior-year periods. The sales growth in the third quarter and the first nine months of 2025 was due to incremental sales impact from recent acquisitions of approximately 5 percent and 4 percent, respectively, favorable volumes, and price realization. Sales increased less than 1 percent in the third quarter and decreased 1 percent in the first nine months of 2025 due to the impact from foreign exchange rates, as compared to prior-year periods.
Previous report
Water Systems net sales in markets outside the U.S. and Canada increased 15 percent in the third quarter and 9 percent in the first nine months of 2025, as compared to the prior-year periods. Sales increased 1 percent in the third quarter and decreased 2 percent in the first nine months of 2025 due to the negative impact from foreign exchange rates, as compared to prior-year periods, while sales increased 13 percent and 10 percent, respectively, compared to prior-year periods due to the incremental sales impact from recent acquisitions. Excluding the impact of foreign currency translation and acquisitions, in both the third quarter and first nine months of 2025, sales grew 1 percent, led by higher sales in the European region partly offset by sales declines in the Latin America regions.
Previous report
Energy Systems net sales increased 15 percent in the third quarter and 9 percent in the first nine months of 2025, as compared to the prior-year periods. This sales increase was primarily due to price realization and favorable volumes.
Previous report
Distribution net sales increased 3 percent in the third quarter and 2 percent in the first nine months of 2025, as compared to the prior-year periods. The Distribution segment sales increased due to higher volumes and price realization.
Previous report
The gross profit margin ratio was 35.9 percent and 36.0 percent in the third quarter and first nine months of 2025, respectively, and 35.7 percent and 36.0 percent in the third quarter and first nine months of 2024, respectively. Gross profit has remained consistent with prior periods primarily due to pricing and volume increases offset by increased cost related to tariffs.
Previous report
Operating income in the third quarter and first nine months of 2025 was $85.1 million and $217.4 million, respectively, increases of 16 percent and 8 percent, respectively, as compared to the prior-year periods.
Previous report
Water Systems operating income in the third quarter and first nine months of 2025 was $60.2 million and $165.5 million, respectively, increases of $7.4 million and $3.2 million, respectively, as compared to the prior-year periods. The third quarter operating income margin was 17.9 percent, an increase of 40 basis points from 17.5 percent in the third quarter of 2024. The increase in operating income for the third quarter was primarily due to higher sales. The first nine months of 2025 operating income margin was 17.2 percent, a decrease of 70 basis points from 17.9 percent in the first nine months of 2024. The decrease in operating income margin in the first nine months was primarily due to incremental expenses associated with recent acquisitions and an unfavorable product and geographic sales mix shift.
Previous report
Energy Systems operating income in the third quarter and first nine months of 2025 was $25.4 million and $76.4 million, respectively, increases of $1.3 million and $7.5 million, respectively, as compared to the prior-year periods. The increases were primarily due to higher sales. The third quarter operating income margin was 31.8 percent, a decrease of 280 basis points from 34.6 percent in the third quarter of 2024. Operating income margin decreased primarily due to an unfavorable product sales mix shift. The first nine months of 2025 operating income margin was 34.1 percent, an increase of 50 basis points from 33.6 percent in the first nine months of 2024. Operating income margin increased primarily due to price realization and cost management.
Previous report
Distribution operating income in the third quarter and first nine months of 2025 was $16.3 million and $34.6 million, respectively, increases of $4.1 million and $10.8 million, respectively, as compared to the prior-year periods. The third quarter operating income margin was 8.3 percent, an increase of 190 basis points from 6.4 percent in the third quarter of 2024. The first nine months of 2025 operating income margin was 6.4 percent, an increase of 190 basis points from 4.5 percent in the first nine months of 2024. Operating income and operating income margins increased primarily due to higher sales and reduced SG&A expenses as a result of cost actions implemented in 2024 to improve the performance of the segment.
Previous report
Interest expense was $3.5 million and $8.1 million in the third quarter and first nine months of 2025, respectively, and $1.6 million and $5.0 million in the third quarter and first nine months of 2024, respectively. The increases in the third quarter and first nine months of 2025 were primarily driven by higher average amount of outstanding debt.
Previous report
Other income (expense), net was a net loss of $(0.2) million and a net gain of $0.5 million in the third quarter and first nine months of 2025, respectively, and net loss of $(0.2) million and a net gain of $0.7 million in the third quarter and first nine months of 2024, respectively.
Previous report
Pension settlement loss
Previous report
In the third quarter of 2025, the Company completed the process of settling the Franklin Electric Co,, Inc. Pension Plan resulting in a third quarter of 2025 pre-tax pension settlement charge of $55.3 million related to actuarial losses previously recorded in Accumulated Other Comprehensive Loss. Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for additional information on the pension settlement loss.
Previous report
Foreign Exchange
Previous report
Net income in the third quarter and first nine months of 2025 was $17.2 million and $109.1 million, respectively, and $54.9 million and $147.3 million in the third quarter and first nine months of 2024, respectively. Net income attributable to Franklin Electric Co., Inc. in the third quarter and first nine months of 2025 was $16.7 million and $107.8 million, respectively, or $0.37 and $2.35 per diluted share. Net income attributable to Franklin Electric Co., Inc. in the third quarter and first nine months of 2024 was $54.6 million and $146.7 million, respectively, or $1.17 and $3.14 per diluted share.
Reworded paragraphs (15)
Previous wording
Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2024 for management’s discussion and analysis of its financial condition and results of operations. The following is management’s discussion and analysis of the Company's financial condition and results of operations for the third quarter and nine months ended September 30, 2025 and 2024.
Current wording
Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for management’s discussion and analysis of its financial condition and results of operations. The following is management’s discussion and analysis of the Company's financial condition and results of operations for the three months ended March 31, 2026 and 2025.
Previous wording
In the first quarter of 2025, the Company acquired Barnes de Colombia S.A. (Barnes), a leading manufacturer and distributor of industrial and commercial pumps based in Colombia. Also in the first quarter of 2025, the Company acquired PumpEng Pty Ltd ("PumpEng"), an Australia-based company that specializes in the design, manufacture and service of submersible pumps for the mining sector. Acquisitions contributed $37.2 million of incremental net sales in the first nine months of 2025. Refer to Note 3 in Item 1 of this Quarterly Report on Form 10-Q for additional information on the Barnes and PumpEng acquisitions.
Current wording
In February of 2025, the Company acquired PumpEng Pty Ltd ("PumpEng"), an Australia-based company that specializes in the design, manufacture and service of submersible pumps for the mining sector. In March 2025, the Company acquired Barnes de Colombia S.A. (Barnes), a leading manufacturer and distributor of industrial and commercial pumps based in Colombia. Acquisitions contributed $8.8 million of incremental net sales in the first three months of 2026 compared to the same period in 2025. Refer to Note 3 in Item 1 of this Quarterly Report on Form 10-Q for additional information on the Barnes and PumpEng acquisitions.
Previous wording
Water Systems net sales in the U.S. and Canada increased 9 percent in the third quarter and 5 percent in the first nine months of 2025, as compared to the prior-year periods. In the third quarter of 2025, sales of large dewatering equipment increased 38 percent, sales of water treatment products increased 9 percent, sales of all other surface pumping equipment increased 4 percent and sales of groundwater pumping equipment were flat compared to 2024. In the first nine months of 2025, sales of large dewatering equipment increased 18 percent, sales of water treatment products increased 8 percent, while sales of groundwater pumping equipment and sales of all other surface pumping equipment were flat compared to 2024.
Current wording
Water Systems net sales in the U.S. and Canada increased 7 percent compared to the first quarter of 2025. Sales increased 1 percent in the first quarter due to the positive impact of foreign exchange rates, as compared to prior year. Sales increased less than 1 percent in the first quarter due to the incremental sales impact from recent acquisitions. The sales increase was led by sales of all other surface pumping equipment up 17 percent, as sales of water treatment products increased 8 percent and sales of groundwater pumping equipment increased 3 percent. These sales increases were partially offset by lower sales of large dewatering equipment of 9 percent compared to 2025. Water Systems net sales in markets outside the U.S. and Canada increased 17 percent compared to the first quarter of 2025. Sales increased 8 percent in the first quarter of 2026 due to the positive impact from foreign exchange rates, as compared to the prior year. Sales increased 7 percent in the first quarter due to the incremental sales impact from recent acquisitions. Outside the U.S. and Canada, sales increased primarily in Asia Pacific and Latin America, as EMEA sales were down year over year.
Previous wording
Energy Systems net sales in the U.S. and Canada increased 11 percent in the third quarter and 9 percent in the first nine months of 2025, as compared to the prior-year periods. The increase was broad based and across all product lines, led by fuel pumping systems. Outside the U.S. and Canada, Energy Systems sales increased 26 percent in the third quarter and 13 percent in the first nine months of 2025, as compared to the prior-year periods, due primarily to sales growth in the Asia Pacific region.
Current wording
Energy Systems net sales in the U.S. and Canada increased 3 percent compared to the first quarter of 2025 due to increases in sales of fuel management and pumping systems. Outside the U.S. and Canada, Energy Systems net sales increased 29 percent, due primarily to higher sales in Asia Pacific.
Previous wording
SG&A expenses were $123.5 million in the third quarter and $366.6 million in the first nine months of 2025 compared to $116.0 million in the third quarter and $352.3 million in the first nine months of 2024. SG&A expenses increased in the third quarter and first nine months of 2025 primarily due to the incremental expense impact from recent acquisitions and higher employee compensation costs. The SG&A expenses ratio was 21.2 percent and 22.6 percent in the third quarter and first nine months of 2025, respectively, and 21.8 percent and 22.9 percent in the third quarter and first nine months of 2024, respectively.
Current wording
SG&A expenses were $123.0 million in the first quarter of 2026 compared to $119.6 million in the first quarter of 2025. The increase was primarily due to the incremental expense impact from recent acquisitions. SG&A as a percent of net sales was 24.6 percent in the first quarter of 2026 and 26.3 percent in the first quarter of 2025.
Previous wording
There were $0.1 million and $0.4 million in restructuring expenses in the third quarter and first nine months of 2025, compared to $0.1 million and $0.1 million restructuring expenses in the third quarter and first nine months of 2024. Restructuring expenses were primarily from continued miscellaneous manufacturing realignment activities.
Current wording
There were $3.9 million restructuring expenses in the Water Systems segment in first quarter of 2026 compared to $0.0 million in the first quarter of 2025. There were $0.0 million restructuring expense in the Distribution segment in the first quarter of 2026 compared to$0.2 million in first quarter of 2025. Restructuring expenses were primarily from continued manufacturing and business realignment activities.
Previous wording
Operating income-Eliminations/Other is composed primarily of intersegment sales and profit eliminations and unallocated general and administrative expenses. The intersegment profit elimination impact in the third quarter and first nine months of 2025 compared to the prior-year periods of 2024 was an unfavorable $1.0 million and $0.4 million, respectively. The intersegment elimination of operating income effectively defers the operating income on sales from Water Systems to Distribution in the consolidated financial results until such time as the transferred product is sold from the Distribution segment to its end third party customer. General and administrative expenses increased $0.2 million and $4.3 million, respectively, compared to the prior-year periods, primarily due to higher employee compensation costs, including incremental expenses associated with the Company’s executive leadership transitions.
Current wording
Operating income-eliminations/other is composed primarily of intersegment sales and profit eliminations and unallocated general and administrative expenses. The intersegment profit elimination impact in the first quarter of 2026 compared to the first quarter of 2025 was unfavorable $0.2 million. The intersegment elimination of operating income effectively defers the operating income on sales from Water Systems to Distribution in the consolidated financial results until such time as the transferred product is sold from the Distribution segment to its end third party customer. General and administrative expenses were flat compared to the prior year.
Previous wording
Foreign currency-based transactions produced an expense of $2.7 million and $8.5 million in the third quarter and first nine months of 2025, respectively, and a gain of $0.1 million and an expense of $5.2 million in the third quarter and first nine months of 2024, respectively. The results in the third quarters and first nine months of 2025 and 2024 are primarily due to transaction losses associated with the Argentine Peso and Turkish Lira relative to the U.S. dollar The Company reports the results of its subsidiaries in Argentina and Turkey using highly inflationary accounting, which requires that the functional currency of the entity be changed to the reporting currency of its parent.
Current wording
Foreign currency-based transactions produced a gain in the first quarter of 2026 of $0.4 million and a loss of $1.3 million in the first quarter of 2025. The expense in 2025 was primarily due to transaction losses associated with the Argentine Peso and Turkish Lira relative to the U.S. dollar. The Company reports the results of its subsidiaries in Argentina and Turkey using highly inflationary accounting, which requires that the functional currency of the entity be changed to the reporting currency of its parent.
Previous wording
The provision for income taxes in the third quarter and first nine months of 2025 was $6.3 million and $36.9 million, respectively, and $17.0 million and $43.8 million in the third quarter and first nine months of 2024, respectively. The effective tax rate for the third quarter and first nine months of 2025 was 26.9 percent and 25.3 percent, respectively, and 23.6 percent and 22.9 percent in the third quarter and the first nine months of 2024, respectively. The increase in the effective tax rate was due to mix of foreign earnings taxed at rates different than the U.S. statutory rate, a decreased benefit in the U.S. foreign-derived intangible income (FDII) provision related to a prior year prepayment of inventory from foreign subsidiaries, and less favorable discrete events in 2025, primarily related to excess tax benefits from share-based compensation.
Current wording
The provision for income taxes in the first quarters of 2026 and 2025 was $11.1 million and $10.5 million, respectively. The effective tax rate for the first quarters of 2026 and 2025 was 24.2 percent and 25.0 percent, respectively. The decrease in the effective tax rate was primarily due to mix of foreign earnings taxed at rates different than the U.S. statutory rate.
Previous wording
As of September 30, 2025, the Company had a $350.0 million revolving credit facility. The facility is scheduled to mature on May 14, 2030. As of September 30, 2025, the Company had $277.3 million borrowing capacity under its credit agreement as $6.4 million in letters of commercial and standby letters of credit were outstanding and undrawn and $66.3 million revolver borrowings were drawn or outstanding.
Current wording
As of March 31, 2026, the Company had a $350.0 million revolving credit facility. The facility is scheduled to mature on May 14, 2030. As of March 31, 2026, the Company had $256.6 million borrowing capacity under its credit agreement as $6.4 million in letters of commercial and standby letters of credit were outstanding and undrawn and $87.0 million revolver borrowings were drawn or outstanding.
Previous wording
At September 30, 2025, the Company had $62.7 million of cash and cash equivalents held in foreign jurisdictions, which is intended to be used to fund foreign operations. There is currently no need or intent to repatriate the majority of these funds in order to meet domestic funding obligations or scheduled cash distributions.
Current wording
At March 31, 2026, the Company had $72.2 million of cash and cash equivalents held in foreign jurisdictions, which is intended to be used to fund foreign operations. There is currently no need or intent to repatriate the majority of these funds in order to meet domestic funding obligations or scheduled cash distributions.
Previous wording
The following table summarizes significant sources and uses of cash and cash equivalents for the first nine months of 2025 and 2024.
Current wording
The following table summarizes significant sources and uses of cash and cash equivalents for the first three months of 2026 and 2025.
Previous wording
Net cash provided by operating activities was $134.7 million for the nine months ended September 30, 2025 compared to $151.1 million used by operating activities for the nine months ended September 30, 2024. The change in operating cash flow was primarily attributable to changes in working capital.
Current wording
Net cash used by operating activities was $40.9 million for the three months ended March 31, 2026 compared to $19.5 million used by operating activities for the three months ended March 31, 2025. The change in operating cash flow was primarily attributable to changes in working capital.
Previous wording
Net cash used in investing activities was $137.1 million for the nine months ended September 30, 2025 compared to $29.3 million used in investing activities for the nine months ended September 30, 2024. The change in investing cash flow was primarily attributable to the Barnes and PumpEng acquisitions in the first nine months of 2025.
Current wording
Net cash used in investing activities was $9.5 million for the three months ended March 31, 2026 compared to $116.1 million used in investing activities for the three months ended March 31, 2025. The change in investing cash flow was primarily attributable to decreased acquisition activity in the first three months of 2026.
Previous wording
Net cash used in financing activities was $112.2 million for the nine months ended September 30, 2025 compared to $100.0 million used in financing activities for the nine months ended September 30, 2024. The change in financing cash flow was primarily due to increased repurchases of Company stock, offset by higher net borrowings under the Company's credit facility in 2025 compared to 2024.
Current wording
Net cash provided by financing activities was $32.6 million for the three months ended March 31, 2026 compared to $2.6 million used in financing activities for the three months ended March 31, 2025. The change in financing cash flow was primarily due to increased net borrowings under the Company's credit facility in 2026 compared to 2025, partially offset by increased repurchases of Company stock.