Nasdaq:FELE
FRANKLIN ELECTRIC CO INC
A premier North American manufacturer of industrial pumps and fluid handling controls serving critical infrastructure markets.
Key Metrics
Investment Thesis
Bull Case
Franklin Electric offers an attractive dividend yield supported by consistent cash generation from its global installed base and high-margin aftermarket services. The company's dominant market position in water infrastructure provides a defensive moat that insulates earnings from broader economic downturns. Continued share buybacks combined with steady revenue growth indicate management is actively optimizing capital structure to enhance shareholder returns.
Bear Case
Declining net income trends over the last two years suggest underlying profitability issues that could persist if macroeconomic conditions worsen. The significant increase in inventory levels of $553.0M raises concerns about potential obsolescence or weak demand in key industrial sectors. High accumulated other comprehensive losses and a retained earnings deficit indicate historical volatility that investors must weigh against current operational performance.
About FRANKLIN ELECTRIC CO INC
Franklin Electric Co. Inc. designs and manufactures reliable industrial fluid handling systems and specialized pumps primarily for water treatment, wastewater management, and irrigation markets. The company serves diverse sectors including municipal infrastructure, agriculture, mining, and energy with its proprietary pump technology. Operating as a leader in electromechanical control systems, the firm delivers critical solutions essential for global resource management.
Analysis
Management Discussion
Despite a decline in net profit from $181.6M in 2024 to $148.7M in 2025, the company successfully expanded revenue to $2.13B, demonstrating resilience against margin pressures. Operating cash flow of $238.9M significantly exceeds net income, indicating high quality earnings and strong working capital management despite a decrease in accounts receivable. The substantial share repurchases of $165.6M suggest management confidence in intrinsic value, though the large negative financing cash flow reflects aggressive capital return policies.
Industry Overview
The industrial pump and fluid handling market is characterized by high barriers to entry due to the need for specialized engineering and certification for critical infrastructure applications. Demand is driven by aging global water systems requiring replacement and upgrades, as well as increasing regulatory focus on sustainable resource management. Consolidation is common in this sector, favoring established players with extensive distribution networks and R&D capabilities.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $2.04B | $2.07B | $2.02B | $2.13B |
| Cost of Revenue | $1.35B | $1.37B | $1.30B | $1.38B |
| Gross Profit | $691.4M | $697.0M | $717.3M | $755.9M |
| Operating Expenses | $434.2M | $434.6M | $473.6M | $486.9M |
| Operating Income | $257.2M | $262.4M | $243.6M | $269.0M |
| R&D | $16.7M | $17.7M | $21.5M | $20.0M |
| G&A | $432.1M | $433.5M | $470.1M | $486.2M |
| Stock-Based Comp | $11.0M | $10.1M | $12.1M | $13.2M |
| D&A | $50.4M | $52.3M | $56.1M | $62.9M |
| Depreciation | $33.1M | $35.1M | $37.2M | $39.3M |
| Amortization | $17.2M | $17.1M | $18.8M | $23.6M |
| Other OpEx | $-14.5M | $-16.6M | $-18.0M | $-19.3M |
| Non-Operating Income | $-22.0M | $-20.2M | $-11.8M | $-74.3M |
| Interest Expense | $11.5M | $11.8M | $6.3M | $10.6M |
| Pre-Tax Income | $235.2M | $242.2M | $231.8M | $194.7M |
| Income Tax | $46.4M | $47.5M | $50.2M | $46.0M |
| Continuing Ops | $188.8M | $194.7M | $181.6M | $148.7M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $188.8M | $194.7M | $181.6M | $148.7M |
| Minority Interest | $1.5M | $1.5M | $1.3M | $1.6M |
| Net to Common | $187.3M | $193.3M | $180.3M | $147.1M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $858.1M | $853.8M | $964.2M | $958.6M |
| Cash & Equivalents | $45.8M | $85.0M | $220.5M | $99.7M |
| Accounts Receivable | $230.4M | $222.4M | $226.8M | $247.5M |
| Inventory | $545.0M | $508.7M | $483.9M | $553.0M |
| Other Current Assets | $36.9M | $37.7M | $33.0M | $58.5M |
| Long-Term Assets | $836.1M | $874.3M | $856.4M | $985.8M |
| PP&E (Net) | $215.2M | $229.7M | $223.6M | $252.2M |
| Intangibles | $231.3M | $230.0M | $213.0M | $251.7M |
| Goodwill | $328.0M | $342.4M | $338.5M | $398.1M |
| Operating Leases | $48.9M | $57.0M | $62.6M | $67.9M |
| Other LT Assets | $12.7M | $15.1M | $18.7M | $15.9M |
| Total Assets | $1.69B | $1.73B | $1.82B | $1.94B |
| Current Liabilities | $405.8M | $287.0M | $433.7M | $344.0M |
| Accounts Payable | $139.3M | $152.4M | $157.0M | $175.0M |
| Current Leases | $16.0M | $17.3M | $18.9M | $20.5M |
| Taxes Payable | $3.2M | $4.7M | $20.2M | $8.8M |
| Other Current Liab | $126.7M | $12.4M | $117.8M | $31.8M |
| Long-Term Liabilities | $218.3M | $231.9M | $118.3M | $275.0M |
| LT Operating Leases | $32.9M | $38.5M | $43.3M | $46.5M |
| Other LT Liab | $185.4M | $193.4M | $75.0M | $228.5M |
| Total Liabilities | $624.1M | $519.0M | $552.0M | $619.0M |
| Shareholders' Equity | $1.07B | $1.21B | $1.27B | $1.33B |
| Retained Earnings | $969.3M | $1.08B | $1.15B | $1.08B |
| AOCI | $-231.4M | $-221.1M | $-254.0M | $-157.5M |
| Total L&E | $1.69B | $1.73B | $1.82B | $1.94B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $188.8M | $194.7M | $181.6M | $148.7M |
| Non-Cash Adjustments | $-223.6M | $218.5M | $45.2M | $113.9M |
| Working Capital Changes | $136.5M | $-97.5M | $34.5M | $-23.8M |
| Cash from Operations | $101.7M | $315.7M | $261.4M | $238.9M |
| Capital Expenditures | $41.9M | $41.4M | $41.7M | $45.3M |
| Cash from Investing | $-43.1M | $-74.3M | $-45.6M | $-157.1M |
| Share Buybacks | $40.5M | $43.3M | $61.0M | $165.6M |
| Dividends Paid | $37.0M | $41.7M | $46.9M | $50.0M |
| Cash from Financing | $-48.5M | $-192.2M | $-74.1M | $-197.3M |
| FX Effect | $-4.9M | $-10.1M | $-6.1M | $-5.3M |
| Net Change in Cash | $5.3M | $39.2M | $135.6M | $-120.9M |
| Beginning Cash | $40.5M | $45.8M | $85.0M | $220.5M |
| Ending Cash | $45.8M | $85.0M | $220.5M | $99.7M |
Frequently Asked Questions
How does FRANKLIN ELECTRIC CO INC make money?
The company generates revenue through its core electromechanical systems division which produces high-performance pumps for water and wastewater applications. Significant income is derived from specialized irrigation equipment designed for agricultural efficiency and conservation projects. Additional revenue streams include mining and process control solutions tailored for heavy industrial operations requiring durable fluid handling technology.
What are the main risks for FELE?
Heavy reliance on cyclical infrastructure spending makes revenue sensitive to municipal budget constraints and public works funding delays. Supply chain volatility for raw materials like copper and cast iron could compress margins if cost controls are not maintained. Regulatory changes regarding water treatment standards may require costly product upgrades or certifications that impact near-term profitability.
What is FELE's competitive advantage?
Franklin Electric maintains a robust installed base of proprietary pumps that generate recurring service and parts revenue, creating high customer switching costs. The company benefits from deep engineering expertise in pump design that allows it to command premium pricing in niche industrial segments. A global distribution network ensures rapid response times for critical infrastructure repairs, strengthening its position against generic competitors.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.