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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________

FORM 10-K

_________

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2025

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

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)

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)

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

None

(Title of each class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


Yes			☐			No			☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.


Yes			☐			No			☒

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.


Yes			☒			No			☐

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			☐

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 Filer

☐

Non-Accelerated Filer

☐

Smaller 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. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements

of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant

to §240.10D-1(b).

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


Yes			☐			No			☒

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant at June 30, 2025 (the last business day of the registrant’s most recently completed second quarter) was $3,941,700,813. The stock price used in this computation was the last sales price on that date, as reported by NASDAQ Global Select Market. For purposes of this calculation, the registrant has excluded shares held by executive officers and directors of the registrant, including restricted shares and except for shares owned by the executive officers through the registrant’s 401(k) Plan. Determination of stock ownership by non-affiliates was made solely for the purpose of responding to this requirement and the registrant is not bound by this determination for any other purpose.

Number of shares of common stock outstanding at February 4, 2026:

44,202,147 shares

DOCUMENTS INCORPORATED BY REFERENCE

A portion of the Proxy Statement for the Annual Meeting of Shareholders to be held on May 8, 2026 (Part III).

FRANKLIN ELECTRIC CO., INC.

TABLE OF CONTENTS


		Page
PART I.		Number

Item 1.	Business	4
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	10
Item 1C.	Cybersecurity	10
Item 2.	Properties	12
Item 3.	Legal Proceedings	12
Item 4.	Mine Safety Disclosures	12
	Supplemental Item - Information about our Executive Officers	13

PART II.

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	14
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 8.	Financial Statements and Supplementary Data	24
	Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)	59
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	61
Item 9A.	Controls and Procedures	61
	Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)	62
Item 9B.	Other Information	63
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	63

PART III.

Item 10.	Directors, Executive Officers, and Corporate Governance	63
Item 11.	Executive Compensation	63
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	63
Item 13.	Certain Relationships and Related Transactions, and Director Independence	63
Item 14.	Principal Accounting Fees and Services	63

PART IV.

Item 15.	Exhibits, Financial Statement Schedules	64

Signatures		69

PART I

ITEM 1. BUSINESS

Description of the Business

Franklin Electric Co., Inc. (“Franklin Electric” or the “Company”) is an Indiana corporation founded in 1944 and incorporated in 1946. Named after America’s pioneer electrical engineer, Benjamin Franklin, Franklin Electric manufactured the first water-lubricated submersible motor for water systems and the first submersible motor for fueling systems. With 2025 revenue of approximately $2.1 billion, the Company designs, manufactures and distributes water and fuel pumping systems, composed primarily of submersible motors, pumps, electronic controls, water treatment systems, and related parts and equipment.

The Company’s water pumping systems move fresh and wastewater for the residential, agricultural and other industrial end markets. The Company also sells various groundwater equipment products to well installation contractors, including water pumping systems, through its and third-party distribution branches located in the U.S. With a growing global footprint, the Company has also evolved into a top supplier of submersible fueling systems at gas stations, making pumps, pipes, electronic controls and monitoring devices.

The Company’s products are sold worldwide by its employee sales force and independent manufacturing representatives. The Company offers normal and customary trade terms to its customers, no significant part of which is of an extended nature. Special inventory requirements are not necessary, and customer merchandise return rights do not extend beyond normal warranty provisions.

Franklin Electric’s Key Factors for Success

While maintaining a culture of safety and lean principles, Franklin Electric strives to deliver quality, availability, service, innovation, and cost in every encounter the Company has with stakeholders, including direct or indirect customers, employees, shareholders, and suppliers. These key factors for success are a roadmap for the Company's growth as a global provider of water and energy systems, through geographic expansion and product line extensions, leveraging its global platform and competency in system design, all while consistently offering the best value to its customer.

Markets and Applications

The Company’s business consists of three reportable segments based on the principal end market served: Water Systems, Energy Systems, and Distribution. The Company changed the name of the Fueling Systems segment to Energy Systems to reflect its diverse portfolio and growth strategy, as well as to better reflect the markets and customers served by the segment. The Company does not allocate corporate expenses or intersegment eliminations to a reportable segment. Segment and geographic information appears in Note 15 - Segment and Geographic Information to the consolidated financial statements.

The market for the Company’s products is highly competitive and includes diversified accounts by size and type. The Company’s Water Systems and Energy Systems products and related equipment are sold to specialty distributors and some original equipment manufacturers (“OEMs”), as well as industrial and petroleum equipment distributors and major oil and utility companies. The Company’s Distribution segment sells products primarily to water well contractors.

Water Systems Segment

Water Systems is a global leader in the production and marketing of water pumping systems and is a technical leader in submersible motors, pumps, drives, electronic controls, water treatment systems, and monitoring devices. The Water Systems segment designs, manufactures and sells motors, pumps, drives, electronic controls, monitoring devices, and related parts and equipment primarily for use in groundwater, water transfer and wastewater.

Water Systems motors, pumps and controls are used principally for pumping clean water and wastewater in a variety of residential, agricultural, municipal and industrial applications. Water Systems also manufactures electronic drives and controls for the motors which control functionality and provide protection from various hazards, such as electrical surges, over-heating and dry wells or dry tanks. In 2023, the Company acquired substantially all of the assets of Action Manufacturing & Supply, Inc. expanding its portfolio in water treatment systems. In 2025, the Company acquired PumpEng Pty Ltd. ("PumpEng"), a manufacturer of submersible pumps for the mining sector headquartered in Australia and Barnes de Colombia S.A. ("Barnes"), a leading manufacturer and distributor of industrial and commercial pumps based in Colombia.

Water Systems products are sold in highly competitive markets. Water Systems contributed about 60 percent of the Company’s total revenue in 2025. Significant portions of segment revenue come from selling groundwater and surface pumps, motors, and controls for residential and commercial buildings, as well as agricultural sales which are more seasonal and subject to commodity price changes. The Water Systems segment generates approximately 25 to 30 percent of its revenue in developing

markets, which often lack municipal water systems. As those countries install water systems and further develop with an expanding middle class or improving quality of living, the Company views those markets as an opportunity. The Company has had 6 to 9 percent compounded annual sales growth in developing regions in recent years. Water Systems competes in each of its targeted markets based on product design, quality, performance, availability and price. The Company’s principal competitors in the specialty water products industry are Grundfos Management A/S, Pentair, Inc. and Xylem, Inc.

2025 Water Systems research and development expenditures were primarily related to the following activities:

•Development of new integrated pressure boosting systems for residential and commercial applications

•Electronic variable frequency drives and controls for pump applications, including enhancements to include remote communication and IOT capability for our drives and making our key platforms easier to utilize by our customers

•Dewatering pumping equipment, including the expansion of our electrical submersible pump lines with addition of range, materials, and control packages for the global market

•Vertical pumping systems for residential applications including integrated designs of pump, motor, and controls

•Submersible pumps for commercial, municipal, and agricultural applications including the development of global standardization of updated cast iron and stainless steel submersible turbine hydraulics, and upgrading the performance of line shaft turbine product offering

Energy Systems Segment

Energy Systems is a global leader in the production and marketing of fuel pumping systems, fuel containment systems and monitoring and control systems. The Energy Systems segment designs, manufactures and sells pumps, motors, pipe, sumps, fittings, vapor recovery components, electronic controls, monitoring devices and related parts and equipment primarily for use in energy system applications.

Energy Systems offers a complete array of components between the tank and the dispenser, including submersible pumps, motors, station hardware, piping, sumps, vapor recovery, corrosion control systems and electronic controls and monitoring. The Energy Systems segment growth has been sustained by a commitment to protecting human health and the environment while delivering the lowest total cost of ownership. Energy Systems takes steps to ensure its products are installed and maintained properly through robust global certification tools for their third-party contractors. The segment serves other energy markets such as power reliability systems and includes intelligent electronic devices that are designed for online monitoring for the power utility, hydroelectric, rail, and telecommunication and data center infrastructure.

Energy Systems products are sold in highly competitive markets. The Company believes there is growth opportunity in developing markets. Energy Systems competes in each of its targeted markets based on product design, quality, performance, availability and price. The Company’s principal competitors in the petroleum equipment industry are Vontier Corporation and Dover Corporation.

2025 Energy Systems research and development expenditures were primarily related to the following activities:

•Developed 220V & 380V Guardian variable frequency drives

•Developed wireless sensor for humidity monitoring and underground tank desiccant system

•Developed new fiberglass tank sump and cover to withstand increased weight and side compression

•Developed Optimizer3 Trip Signature Monitor for continuous monitoring of substation circuit breakers

•Developed EVO LLD (line leak detection) to detect and minimize leaks

Distribution Segment

The Distribution segment is operated as a collection of wholly owned leading groundwater distributors known as the Headwater Companies. Headwater Companies deliver quality products and leading brands to the industry, providing contractors with the products and services they demand to meet their application challenges. The Distribution segment operates within the U.S. professional groundwater market.

Information Regarding All Reportable Segments

Research and Development

The Company incurred research and development expenses as follows:


(In millions)	2025		2024		2023
Research and development expenses	$	20.0	$	21.5	$	17.7

Expenses incurred were for activities related to the development of new products, improvement of existing products and manufacturing methods and other applied research and development.

The Company owns a number of patents, trademarks, and licenses. In the aggregate, these patents are of material importance to the operation of the business; however, the Company believes that its operations are not dependent on any single patent or group of patents.

Raw Materials

The principal raw materials used in the manufacture of the Company’s products are coil and bar steel, stainless steel, copper wire and aluminum ingot. Major components are electric motors, electrical components, motor protectors, forgings, gray iron castings, plastic resins and bearings. Most of these raw materials are available from multiple sources in the U.S. and world markets. Generally, the Company believes that adequate alternative sources are available for the majority of its key raw material and purchased component needs; however, the Company is dependent on a single or limited number of suppliers for certain materials or components. The Company believes that availability of fuel and energy is adequate to satisfy current and projected overall operations unless interrupted by government direction, allocation or other disruption.

Major Customers

No single customer accounted for over 10 percent of net sales in 2025, 2024, or 2023. No single customer accounted for over 10 percent of gross accounts receivable in 2025 and 2024.

Backlog

The dollar amount of backlog by segment was as follows:


(In millions)	February 4, 2026		February 5, 2025
Water Systems	$	99.0	$	98.4
Energy Systems	21.0		21.5
Distribution	19.1		20.8
Consolidated	$	139.1	$	140.7

The backlog is composed of written orders for products for which prices are typically established at the time the order is placed, primarily standard catalog items. All backlog orders are expected to be filled in 2026. The Company’s sales in the first quarter are generally less than its sales in other quarters due to less water well drilling and overall product sales during the winter months in the Northern hemisphere. Beyond that, there is no seasonal pattern to the backlog and the backlog has not proven to be a significant indicator of future sales.

Environmental Matters

The Company believes that it is in compliance with all applicable federal, state and local laws concerning the discharge of material into the environment, or otherwise relating to the protection of the environment. The Company has not experienced any material costs in connection with environmental compliance, and does not believe that such compliance will have any material effect upon the financial position, results of operations, cash flows or competitive position of the Company.

Human Capital Resources

As of December 31, 2025, the Company had approximately 6,500 employees. The Company is committed to providing safe work environments for its employees, prioritizing wellness, health and safety best practices and requiring ethical compliance with established policies. Further information regarding its human capital details and initiatives can be found in the 2025 Franklin Electric Sustainability Report available for download on the Company's website.

Available Information

The Company is a U.S. public reporting company under the Exchange Act and files reports, proxy statements and other information with the SEC, which can be accessed from the SEC's home page on the Internet at www.sec.gov. The Company’s website address is www.franklin-electric.com. The Company makes available free of charge on or through its website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. Additionally, the Company’s website includes the Company’s corporate governance guidelines, its Board committee charters, Lead Independent Director charter, and the Company’s code of business conduct and ethics. Information contained on the Company’s website is not part of this annual report on Form 10-K.

ITEM 1A. RISK FACTORS

The following describes the principal risks affecting the Company and its business. Additional risks and uncertainties, not presently known to the Company, could negatively impact the Company’s results of operations or financial condition in the future.

Risks Related to the Industry

Reduced housing starts adversely affect demand for the Company’s products, thereby reducing revenues and earnings. Demand for certain Company products is affected by housing starts. Variation in housing starts due to economic volatility both within the United States and globally could adversely impact gross margins and operating results.

The Company’s results may be adversely affected by global macroeconomic supply and demand conditions related to the energy and mining industries. The energy and mining industries are users of the Company’s products, including the coal, iron ore, gold, copper, oil, and natural gas industries. Decisions to purchase the Company’s products are dependent upon the performance of the industries in which our customers operate. If demand or output in these industries increases, the demand for our products will generally increase. Likewise, if demand or output in these industries declines, the demand for our products will generally decrease. The energy and mining industries’ demand and output are impacted by the prices of commodities in these industries which are frequently volatile and change in response to general economic conditions, economic growth, commodity inventories, and any disruptions in production or distribution. Changes in these conditions could adversely impact sales, gross margin, and operating results.

Volatility in the prices and availability of raw materials, components, finished goods and other commodities could adversely affect operations. The Company purchases most of the raw materials for its products on the open market and relies on third parties for the sourcing of certain finished goods. Accordingly, the cost of its products may be affected by changes in the market price and its ability to successfully obtain raw materials, sourced components, or finished goods. The Company and its suppliers also use natural gas and electricity in manufacturing products both of which have historically been volatile. The Company does not generally engage in commodity hedging for raw materials and energy. Significant increases in the prices or disruptions in the supply chain of commodities, sourced components, finished goods, energy or other commodities could cause product prices to increase, which may reduce demand for products or make the Company more susceptible to competition. Furthermore, in the event the Company is unable to pass along increases in operating costs to its customers, margins and profitability may be adversely affected.

The growth of municipal water systems and increased government restrictions on groundwater pumping could reduce demand for private water wells and the Company’s products, thereby reducing revenues and earnings. Demand for certain Company products is affected by rural communities shifting from private and individual water well systems to city or municipal water systems. Many economic and other factors outside the Company’s control, including governmental regulations on water quality, and tax credits and incentives, could adversely impact the demand for private and individual water wells. A decline in private and individual water well systems in the United States or other economies in the international markets the Company serves could reduce demand for the Company’s products and adversely impact sales, gross margins, and operating results.

Demand for Energy Systems products is impacted by environmental legislation which may cause significant fluctuations in costs and revenues. Environmental legislation related to air quality and fuel containment may create demand for certain Energy Systems products which must be supplied in a relatively short time frame to meet the governmental mandate. During periods of increased demand, the Company’s revenues and profitability could increase significantly, although the Company can also be at risk of not having capacity to meet demand or cost overruns due to inefficiencies during ramp up to the higher production levels. After the Company’s customers have met the compliance requirements, the Company’s revenues and profitability may decrease significantly as the demand for certain products declines substantially. The risk of not reducing production costs in relation to the decreased demand and reduced revenues could have a material adverse impact on gross margins and the Company’s results of operations.

Changes in tax legislation regarding the Company’s U.S. or foreign earnings could materially affect future results. Since the Company operates in different countries and is subject to taxation in different jurisdictions, the Company’s future effective tax rates could be impacted by changes in such countries’ tax laws or their interpretations. Both domestic and international tax laws are subject to change as a result of changes in fiscal policy, legislation, evolution of regulation and court rulings. The application of these tax laws and related regulations is subject to legal and factual interpretation, judgment, and uncertainty. The Company cannot predict whether any proposed changes in tax laws will be enacted into law or what, if any, changes may be made to any such proposals prior to their being enacted into law. If the tax laws change in a manner that increases the Company’s tax obligation, it could have a material adverse impact on the Company’s results of operations and financial condition.

On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which

generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework. A significant number of countries have enacted portions, or all, of the OECD proposal with effective dates in 2024 and 2025 for different aspects of the directive, with many additional countries expected to implement similar legislation with varying effective dates in the future. In January 2026, the OECD issued additional guidance, including a safe harbor framework for certain U.S. parented groups that is expected to largely reduce the impact of Pillar Two for the Company. Even with this safe harbor, the Company could still be subject to local minimum tax regimes in countries that have adopted these rules. Pillar Two has not had a material impact on the Company’s income tax liability, provision for income taxes, or effective tax rate, nor does the Company expect a material impact in the future.

Changes in foreign trade policies and other factors beyond our control may adversely impact our business and financial performance. The U.S. government recently implemented significant trade policy and tariff actions, including but not limited to tariffs on imported steel and aluminum products, multiple tariffs on certain imports from China, tariffs on certain imports from Canada and Mexico, and baseline tariffs on most imports from most other countries. These actions have increased the cost of certain raw materials and components and created significant uncertainty and potential risks for our business. Certain countries have announced retaliatory tariffs in response to such actions. The U.S. government or other foreign governments may in the future propose and implement additional changes to international trade agreements, tariffs, taxes, and other government rules and regulations and, if initiated, retaliatory tariffs or other actions may be taken by certain governments. While the future financial impact of these actions and potential additional tariff actions and retaliatory actions by the U.S. or other countries remain unknown, the impacts could have a material adverse effect on our financial statements in any particular reporting period.

Risks Related to the Business

The Company is exposed to political, economic and other risks that arise from operating a multinational business. The Company has significant operations outside the United States, including Europe, South Africa, Brazil, Mexico, India, China, Turkey, Canada and Argentina. Further, the Company obtains raw materials and finished goods from foreign suppliers. Accordingly, the Company’s business is subject to political, economic, and other risks that are inherent in operating a multinational business. These risks include, but are not limited to, the following:

•Difficulty in enforcing agreements and collecting receivables through foreign legal systems

•Trade protection measures and import or export licensing requirements

•Inability to obtain raw materials and finished goods in a timely manner from foreign suppliers

•Imposition of exchange controls or other restrictions

•Difficulty in staffing and managing widespread operations and the application of foreign labor regulations

•Compliance with foreign laws and regulations

•Changes in general economic and political conditions in countries where the Company operates

Additionally, the Company’s operations outside the United States could be negatively impacted by changes in treaties, agreements, policies, and laws implemented by the United States. If the Company does not anticipate and effectively manage these risks, these factors may have a material adverse impact on its international operations or on the business as a whole.

The Company has significant investments in foreign entities and has significant sales and purchases in foreign denominated currencies creating exposure to foreign currency exchange rate fluctuations. The Company has significant investments outside the United States, including Europe, South Africa, Brazil, Mexico, India, China, Turkey, Canada and Argentina. Further, the Company has sales and makes purchases of raw materials and finished goods in foreign denominated currencies. Accordingly, the Company has exposure to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Foreign currency exchange rate risk is partially mitigated through several means: maintenance of local production facilities in the markets served, invoicing of customers in the same currency as the source of the products, prompt settlement of intercompany balances, limited use of foreign currency denominated debt, and application of derivative instruments when appropriate. To the extent that these mitigating strategies are not successful, foreign currency rate fluctuations can have a material adverse impact on the Company’s international operations or on the business as a whole.

Turkey and Argentina represent highly inflationary economies as their three-year cumulative inflation rate exceeded 100 percent. As a result, the Company remeasures the financial statements for the Company's Turkish and Argentinian operations in accordance with the highly inflationary accounting rules in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 830 "Foreign Currency Matters". As a result, all gains and losses resulting from the remeasurement of the financial results of operations and other transactional foreign exchange gains and losses are reflected in earnings, which have resulted in volatility within the Company’s earnings, rather than as a component of the Company’s comprehensive income within shareholders’ equity. Turkey and Argentina being highly inflationary economies has had an adverse effect on the Company’s consolidated results of operations and further inflation may have additional adverse effects on the Company's consolidated financial position, results of operations, or cash flows in future periods.

The Company’s acquisition strategy entails expense, integration risks, and other risks that could affect the Company’s earnings and financial condition. One of the Company’s continuing strategies is to increase revenues and expand market share through acquisitions that will provide complementary Water and Energy Systems products, add to the Company’s global reach, or both. The Company spends significant time and effort expanding existing businesses through identifying, pursuing, completing, and integrating acquisitions, which generate expense whether or not the acquisitions are actually completed. Competition for acquisition candidates may limit the number of opportunities and may result in higher acquisition prices. There is uncertainty related to successfully acquiring, integrating and profitably managing additional businesses without substantial costs, delays or other problems. There can also be no assurance that acquired companies will achieve revenues, profitability or cash flows that justify the investment. Failure to manage or mitigate these risks could adversely affect the Company’s results of operations and financial condition.

The Company’s products are sold in highly competitive markets, by numerous competitors whose actions could negatively impact sales volume, pricing and profitability. The Company is a global leader in the production and marketing of groundwater and fuel pumping systems. End user demand, distribution relationships, industry consolidation, new product capabilities of the Company’s competitors or new competitors, and many other factors contribute to a highly competitive environment. Additionally, some of the Company’s competitors have substantially greater financial resources than the Company. The Company believes that consistency of product quality, timeliness of delivery, service, and continued product innovation, as well as price, are principal factors considered by customers in selecting suppliers. Competitive factors previously described may lead to declines in sales or in the prices of the Company’s products which could have an adverse impact on its results of operations and financial condition.

The Company’s products are sold to numerous distribution outlets based on market performance. The Company may, from time to time, change distribution outlets in certain markets based on market share and growth. These changes could adversely impact sales and operating results.

Transferring operations of the Company to lower cost regions may not result in the intended cost benefits. The Company is continuing its rationalization of manufacturing capacity between all existing manufacturing facilities and the manufacturing complexes in lower cost regions. To implement this strategy, the Company must complete the transfer of assets and intellectual property between operations. Each of these transfers involves the risk of disruption to the Company’s manufacturing capability, supply chain, and, ultimately, to the Company’s ability to service customers and generate revenues and profits and may include significant severance amounts.

Delays in introducing new products or the inability to achieve or maintain market acceptance with existing or new products may cause the Company’s revenues to decrease. The industries to which the Company belongs are characterized by intense competition, changes in end-user requirements, and evolving product offerings and introductions. The Company believes future success will depend, in part, on the ability to anticipate and adapt to these factors and offer, on a timely basis, products that meet customer demands. Failure to successfully develop new and innovative products or to enhance existing products could result in the loss of existing customers to competitors or the inability to attract new business, either of which may adversely affect the Company’s revenues.

Certain Company products are subject to regulation and government performance requirements in addition to the warranties provided by the Company. The Company’s products are subject to government regulations and standards for manufacture, assembly, and performance in addition to the warranties provided by the Company. The Company’s failure to meet all such standards or perform in accordance with warranties could result in significant warranty or repair costs, lost sales and profits, damage to the Company’s reputation, fines or penalties from governmental organizations, and increased litigation exposure. Changes to these regulations or standards may require the Company to modify its business objectives and incur additional costs to comply. Any liabilities or penalties actually incurred could have a material adverse effect on the Company’s earnings and operating results.

The Company has significant goodwill and intangible assets and future impairment of the value of these assets may adversely affect the Company's operating results and financial condition. The Company’s total assets include substantial intangible assets, primarily goodwill. Goodwill results from the Company’s acquisitions, representing the excess of the purchase price paid over the fair value of the net assets acquired. Goodwill and indefinite-lived intangible assets are tested annually for impairment during the fourth quarter or as warranted by triggering events. If future operating performance at one or more of the Company’s operating segments were to decline significantly below current levels, the Company could incur a non-cash impairment charge to operating earnings. The recognition of an impairment of a significant portion of the Company’s goodwill or intangible assets could have a material adverse impact on the Company’s results of operations and financial condition.

The Company’s business may be adversely affected by the seasonality of sales and weather conditions. The Company experiences seasonal demand in a number of markets within the Water Systems segment. End-user demand in primary markets follows warm weather trends and is at seasonal highs from April to August in the Northern Hemisphere. Demand for residential and agricultural water systems are also affected by weather-related disasters including heavy flooding and drought. Changes in these patterns could reduce demand for the Company’s products and adversely impact sales, gross margins, and operating results.

The Company depends on certain key suppliers, and any loss of those suppliers or their failure to meet commitments may adversely affect the Company's business and results of operations. The Company is dependent on a single or limited number of suppliers for some materials or components required in the manufacture of its products. If any of those suppliers fail to meet their commitments to the Company in terms of delivery or quality, the Company may experience supply shortages that could result in its inability to meet customer requirements, or could otherwise experience an interruption in operations that could negatively impact the Company’s business and results of operations.

The Company’s operations are dependent on information technology infrastructure and failures could significantly affect its business. The Company depends on information technology infrastructure in order to achieve business objectives. If the Company experiences a problem that impairs this infrastructure, such as a computer virus, a problem with the functioning of an important IT application, or an intentional disruption of IT systems by a third party, the resulting disruptions could impede the Company's ability to record or process orders, manufacture and ship products in a timely manner, or otherwise carry on business in the ordinary course. Any such events could cause the loss of customers or revenue and could cause significant expense to be incurred to eliminate these problems and address related security concerns. The Company is also subject to certain U.S. and international data protection and cybersecurity regulations. Complying with these laws may subject the Company to additional costs or require changes to the Company’s business practices. Any inability to adequately address privacy and security concerns or comply with applicable privacy and data security laws, rules and regulations could expose the Company to potentially significant liabilities.

Additional Risks to the Company. The Company is subject to various risks in the normal course of business as well as catastrophic events including severe weather events, earthquakes, fires, acts of war, terrorism, civil unrest, epidemics and pandemics and other unexpected events. Exhibit 99.1 sets forth risks and other factors that may affect future results, including those identified above, and is incorporated herein by reference.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

Risk Management and Strategy

The Company’s data protection and privacy program is designed to help it assess, identify, manage, and mitigate risks relating to cybersecurity threats and incidents. The Company designs its cybersecurity standards, policies, processes and controls to operate in an integrated manner, leveraging applicable industry standards and security frameworks, including the National Institute of Standards and Technology (NIST) Cybersecurity Framework and Center for Internet Security, Inc (CIS) Controls, as guides in supporting its ability to perform such functions.

The Company manages its data protection and privacy program, fostering collaboration with partners across business units and functional areas to identify and assess material cybersecurity threats, evaluate their severity, and explore ways to mitigate and manage such risks. Third parties are engaged to assess the Company’s cybersecurity posture and adherence to the NIST Cybersecurity Framework and CIS Controls, and the Company evaluates cybersecurity risks as part of its annual risk assessment process. Cybersecurity risk mitigation strategies and initiatives are developed based on these assessments.

As part of the Company’s data protection and privacy program, it maintains a cyber risk management program that seeks to address key risk management concepts, including mission and vision, escalation path for risk mitigation, risk assessments, and risk treatment. The Company does so by conducting a variety of planning and preparedness activities, including employing monitoring tools to identify suspicious or anomalous activity, vulnerabilities, or signs of compromise across its networks, systems, and data. The Company utilizes data from attack surface management tools to produce a prioritized set of vulnerabilities for remediation. A key area for the program is employee cybersecurity education. The Company’s employees play a key role in cybersecurity and participate in mandatory cybersecurity training, phishing attack simulations, educational events, and receive news bulletins. The Company’s data protection and privacy program is designed to adhere to and adapt to global privacy and data protection laws.

The Company has established policies, processes, and controls that are designed to monitor, detect, investigate, respond to, and escalate management of cybersecurity threats and incidents. If the Company experiences a cybersecurity incident, the Company activates an incident response plan, which includes processes to enable it to triage, assess severity of, escalate, contain, investigate, and remediate the incident, as well as to comply with applicable legal obligations and mitigate brand and reputational harm. Based on initial investigation into such incident’s impact to the Company, the actor(s) involved, and other factors, the Company assigns a severity level to an incident, which dictates the escalation path for a given incident. Incidents rising to higher levels of severity and potential materiality are escalated to designated members of the Company’s senior management for further assessment, response, and remediation. Additionally, the Company has established a Cyber Crisis Management Team, responsible for addressing and responding to the most severe cyber incidents. If warranted, senior management notifies the Audit Committee and/or the full Board of Directors, as appropriate. Throughout this process, the Company continues to investigate the incident and, as its understanding of the incident evolves, updates its severity assessment, as necessary.

Governance

The Company’s cybersecurity program and approach is overseen by its Board of Directors, in coordination with the Audit Committee, and Senior Leadership, along with its Vice President, Information Technology. The Vice President, Information Technology reports to the Chief Administration Officer and has more than 25 years of IT experience with over 10 years of cybersecurity and international business experience. The Board of Directors receives annual reports from Senior Leadership on the Company’s cybersecurity risks. In addition, Senior Leadership updates the Board of Directors, as necessary, regarding any significant cybersecurity incidents. The Board of Directors and Senior Leadership review the strategy, tools, metrics and latest trends affecting cybersecurity utilizing the NIST Cybersecurity Framework and CIS Controls as the foundation for its cybersecurity strategy and approach.

The Company’s business strategy, results of operations and financial condition have not been materially affected and are not reasonably likely to be affected by risks from cybersecurity threats, including as a result of previously identified cybersecurity incidents, but it cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents. For more information on the Company’s information technology related risks, see Item 1A Risk Factors of this Annual Report on Form 10-K.

ITEM 2. PROPERTIES

Franklin Electric serves customers worldwide with over 240 manufacturing and distribution facilities located in over 20 countries. The Global Headquarters is located in Fort Wayne, Indiana, United States and houses sales, marketing and administrative offices along with a state-of-the-art research and engineering facility. Besides the owned corporate facility, the Company considers the following to be principal properties:


Location / Segment	Purpose	Own/Lease
Santa Catarina, Brazil / Water & Energy	Manufacturing/Distribution/Sales	Own
Sao Paulo, Brazil / Water & Energy	Manufacturing/Distribution/Sales	Own
Jiangsu Province, China / Water & Energy	Manufacturing	Own
Cundinamarca, Colombia / Water	Manufacturing	Own
Brno, Czech Republic / Water	Manufacturing	Own
Vicenza, Italy / Water	Manufacturing	Own
Nuevo Leon, Mexico / Water & Energy	Manufacturing	Own
Edenvale, South Africa / Water	Manufacturing	Own
Izmir, Turkey / Water & Energy	Manufacturing/Distribution/Sales/R&D	Own
Florida, United States / Water	Manufacturing	Lease
Indiana, United States / Water	Manufacturing/Distribution/Sales	Lease
Montana, United States / Distribution	Distribution	Own
North Carolina, United States / Distribution	Distribution	Own
Oklahoma, United States / Water	Manufacturing	Own
Oregon, United States / Water	Manufacturing/Distribution/Sales/R&D	Lease
Wisconsin, United States / Energy	Manufacturing/Distribution/Sales/R&D	Own

The Company also owns and leases other smaller facilities which serve as manufacturing locations and distribution warehouses. The Company does not consider these facilities to be principal to the business or operations. In the Company’s opinion, its facilities are suitable for their intended use, adequate for the Company’s business needs, all currently utilized and in good condition.

ITEM 3. LEGAL PROCEEDINGS

The Company is defending various claims and legal actions which have arisen in the ordinary course of business. For a description of the Company's material legal proceedings, refer to Note 7 - Commitments and Contingencies, in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K, which is incorporated into this Item 3 by reference. In the opinion of management, based on current knowledge of the facts and after discussion with counsel, other 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.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Current executive officers of the Company, their ages, current position, and business experience during at least the past five years as of December 31, 2025, are as follows:


Name	Age	Position Held	Period Holding Position


Joseph A. Ruzynski	50	Chief Executive Officer	2024-present
		President of Enclosures, nVent Electric plc	2018-2024
Jennifer A. Wolfenbarger	51	Vice President, Chief Financial Officer	2025 - present
		Vice President, Chief Financial Officer, Insulation, Owens Corning	2021 - 2025
		Vice President, Group Chief Financial Officer Global Quality and Operations, Stryker	2018-2021
Brent L. Spikes	54	Vice President, Global Manufacturing	2022 - present
		Vice President, Global Water Engineering	2020 - 2022



Daniela M. Williams	49	Vice President, Chief Human Resources Officer	2025 - present
		Global Vice President of People & Culture, Visteon Corporation	2022 - 2025
		Senior Human Resources Director - Corporate Functions and Americas Region, Visteon Corporation	2018-2022
DeLancey W. Davis	60	Vice President and President, Headwater Companies	2017 - present
Greg M. Levine	52	Vice President and President, Global Water	2023 - present
		President and CEO, Motion Control and Drives, Nidec Corporation	2020-2023

Jay J. Walsh	56	Vice President and President, Energy Systems	2019 - present

Jonathan M. Grandon	50	Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary	2016 - present

All executive officers are elected annually by the Board of Directors at the Board meeting held in conjunction with the annual meeting of shareholders. All executive officers hold office until their successors are duly elected or until their death, resignation or removal by the Board.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The number of shareholders of record as of February 4, 2026 was 529. The Company’s stock is traded on the NASDAQ Global Select Market under the symbol FELE. Broadridge Corporate Issuer Solutions, Inc. 1155 Long Island Avenue, Edgewood, New York, 11717 serves as the registrar, record keeper and stock transfer agent.

Dividends paid per common share as quoted by the NASDAQ Global Select Market for 2025 and 2024 were as follows:


Dividends per Share
	2025		2024
1st Quarter	$	.265	$	.250
2nd Quarter	$	.265	$	.250
3rd Quarter	$	.265	$	.250
4th Quarter	$	.265	$	.250

The Company has increased dividend payments on an annual basis for 33 consecutive years. The payment of dividends in the future will be determined by the Board of Directors and will depend on business conditions, earnings, and other factors.

Issuer Purchases of Equity Securities

In April 2007, the Company’s Board of Directors unanimously approved a plan to increase the number of shares remaining for repurchase from 628,692 to 2,300,000 shares. There is no expiration date for this plan. On August 3, 2015, the Company’s Board of Directors approved a plan to increase the number of shares remaining for repurchase by an additional 3,000,000 shares. The authorization was in addition to the 535,107 shares that remained available for repurchase as of July 31, 2015. In February 2023, the Company’s Board of Directors approved a plan to increase the number of shares remaining for repurchase by an additional 1,000,000 shares. The authorization was in addition to the 215,872 shares that remained available for repurchase as of February 16, 2023. In October 2024, the Company’s Board of Directors approved a plan to increase the number of shares remaining for repurchase by an additional 1,000,000 shares. In June 2025, the Company's Board of Directors approved a plan to increase the number of shares remaining for repurchase by an additional 1,200,000 shares. The authorization was in addition to the 1,126,635 shares that remained available for repurchase as of June 9, 2025. The Company repurchased 350,000 shares for approximately $34.3 million under this plan during the fourth quarter of 2025. The maximum number of shares that may still be purchased under this plan as of December 31, 2025 is 776,635.


Period	Total Number of Shares Repurchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Number of Shares that may be Repurchased
October 1 - October 31	—	$	—	—	1,126,635
November 1 - November 30	—	$	—	—	1,126,635
December 1 - December 31	350,000	$	97.93	350,000	776,635
Total	350,000	$	97.93	350,000	776,635

Stock Performance Graph

The following graph compares the Company’s cumulative total shareholder return (Common Stock price appreciation plus dividends, on a reinvested basis) over the last five fiscal years with the Invesco S&P Global Water Index and the Russell 2000 Index.

Hypothetical $100 invested on December 31, 2020 (fiscal year-end 2020) in Franklin Electric common stock (FELE), Invesco S&P Global Water Index, and Russell 2000 Index, assuming reinvestment of dividends:


	YE 2020		2021		2022		2023		2024		2025
FELE	$	100	$	137	$	116	$	125	$	129	$	128
Invesco S&P Global Water Index	100		130		101		117		122		145
Russell 2000	100		114		90		106		118		133

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Discussion of the year-over-year comparison of changes in the Company's financial condition and results of operation as of and for the fiscal years ended December 31, 2024 and December 31, 2023 can be found in Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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 $48.9 million in incremental net sales in 2025. Refer to Note 3 – Acquisitions in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information on the Barnes and PumpEng acquisitions.

In 2025, the Company completed the process of settling the Franklin Electric Co,, Inc. Pension Plan and a partial settlement of the Franklin Electric Co. Restoration plan resulting in a pre-tax pension settlement charge of $54.9 million related to actuarial losses previously recorded in Accumulated Other Comprehensive Loss. Refer to Note 10 in Item 8 of this Annual Report on Form 10-K for additional information on the pension settlement charge.

2025 vs. 2024

OVERVIEW

Net sales in 2025 were $2.1 billion and increased 5 percent, as compared to the prior year. The sales increases were due to the incremental sales impact from recent acquisitions, price realization and higher volumes. The Company's consolidated gross profit was $755.9 million and $717.3 million, respectively, for 2025 and 2024, and increased 5 percent from the prior year. Diluted earnings per share was $3.22 for 2025, a decrease of $0.64 from the prior year. Diluted earnings per share for 2025 was negatively impacted by the pension settlement charge of $41.5 million net of tax benefit ($54.9 million gross of tax benefit) related to actuarial losses previously recorded in Accumulated Other Comprehensive Loss. Refer to Note 10 in Item 8 of this Annual Report on Form 10-K for additional information on the pension settlement charge.

RESULTS OF OPERATIONS

Net Sales

Net sales in 2025 were $2.1 billion and increased 5 percent compared to the prior year. The sales growth in 2025 was due to incremental sales impact from recent acquisitions of approximately 3 percent, price realization, and favorable volumes. 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, Turkish Lira and Brazilian Real. However, the Company increased prices in the local currency to offset the impact of currency devaluation in the Argentina and Turkey highly inflationary economies. As a result, the net negative impact of foreign currency exchange rates on net sales was less than 1 percent in 2025.


	Net Sales
(In millions)	2025		2024		2025 v 2024
Water Systems	$	1,256.4	$	1,184.0	$	72.4
Energy Systems	299.0		273.7		25.3
Distribution	700.7		685.5		15.2
Eliminations	(124.8)		(121.9)		(2.9)
Consolidated	$	2,131.3	$	2,021.3	$	110.0

Net Sales-Water Systems

Water Systems net sales increased 6 percent in 2025, as compared to the prior year. The sales growth in 2025 was due to incremental sales impact from recent acquisitions of approximately 4 percent and price realization.

Water Systems net sales in the U.S. and Canada increased 3 percent in 2025, as compared to the prior year. In 2025, sales of large dewatering equipment increased 7 percent, sales of water treatment products increased 6 percent, and sales of groundwater pumping equipment increased 1 percent, and sales of all other surface pumping equipment decreased 1 percent compared to 2024.

Water Systems net sales in markets outside the U.S. and Canada increased 10 percent in 2025, as compared to the prior year. The sales increase compared to prior year period was primarily due to the incremental sales impact from recent acquisitions.

Net Sales-Energy Systems

Energy Systems net sales increased 9 percent in 2025, as compared to the prior year. This sales increase was primarily due to price realization and favorable volumes.

Energy Systems net sales in the U.S. and Canada increased 8 percent in 2025, as compared to the prior year. The increase was broad based across all major product lines, led by fuel pumping systems. Outside the U.S. and Canada, Energy Systems sales increased 13 percent in 2025, as compared to the prior year, due primarily to sales growth in the Asia Pacific region.

Net Sales-Distribution

Distribution net sales increased 2 percent in 2025, as compared to the prior year. The Distribution segment sales increased due to higher volumes and price realization.

Gross Profit and Expense Ratios


	Twelve months ended Dec 31,
(In Millions)	2025		% of Net Sales		2024		% of Net Sales
Gross Profit	$	755.9	35.5	%	$	717.3	35.5	%
Selling, General and Administrative Expense	486.2		22.8	%	470.1		23.3	%

Gross Profit

The gross profit margin ratio was 35.5 percent in 2025 and 2024, respectively. Gross profit has remained consistent with prior year primarily due to pricing and volume increases offset by increased costs related to tariffs.

Selling, General and Administrative (“SG&A”)

SG&A expenses were $486.2 million in 2025 compared to $470.1 million in 2024. SG&A expenses increased in 2025 primarily due to the incremental expense impact from recent acquisitions and higher employee compensation costs. The SG&A expenses ratio was 22.8 percent and 23.3 percent in 2025 and 2024, respectively.

Restructuring Expenses

There were $0.7 million and $3.5 million in restructuring expenses in 2025 and 2024, respectively. Restructuring expenses were primarily from various manufacturing realignment activities.

Operating Income

Operating income in 2025 was $268.9 million and $243.6 million in 2024, an increase of 10 percent, as compared to the prior year.


	Operating income (loss)
(In millions)	2025		2024		2025 v 2024
Water Systems	$	207.2	$	197.9	$	9.3
Energy Systems	99.1		93.6		5.5
Distribution	39.8		24.3		15.5
Corporate Expenses and Eliminations	(77.2)		(72.2)		(5.0)
Consolidated	$	268.9	$	243.6	$	25.3

Operating Income-Water Systems

Water Systems operating income in 2025 was $207.2 million, an increase of $9.3 million as compared to the prior year. The increase in operating income was primarily due to higher sales. The 2025 operating income margin was 16.5 percent, a decrease of 20 basis points from 16.7 percent in 2024. The decrease in operating income margin was primarily due to incremental expenses associated with recent acquisitions and an unfavorable product and geographic sales mix shift.

Operating Income-Energy Systems

Energy Systems operating income in 2025 was $99.1 million, an increase of $5.5 million as compared to the prior year. The increase was primarily due to higher sales. The 2025 operating income margin was 33.1 percent, a decrease of 110 basis points

from 34.2 percent in 2024. Operating income margin decreased primarily due to higher tariff cost and an unfavorable geographic sales mix shift.

Operating Income-Distribution

Distribution operating income in 2025 was $39.8 million, an increase of $15.5 million as compared to the prior year. The 2025 operating income margin was 5.7 percent, an increase of 210 basis points from 3.5 percent in 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.

Operating Income-Corporate Expenses and Eliminations

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 2025 compared to the prior year of 2024 was an unfavorable $2.0 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 increased $3.0 million compared to the prior year, primarily due to higher employee compensation costs, including incremental expenses associated with the Company’s executive leadership transitions.

Interest Expense

Interest expense was $10.6 million and $6.3 million in 2025 and 2024, respectively. The increase in 2025 was primarily driven by higher average amount of outstanding debt.

Other Income, net

Other income, net was a net gain of $0.6 million and $1.3 million in 2025 and 2024, respectively.

Pension settlement loss

The loss in 2025 is primarily due to the Company’s settlement of its US Pension Plan and a partial settlement of the Franklin Electric Co. Restoration plan, which resulted in a pre-tax loss of $54.9 million related to actuarial losses previously recorded in Accumulated Other Comprehensive Loss. Refer to Note 10 in Item 8 of this Annual Report on Form 10-K for additional information on the pension settlement charge.

Foreign Exchange

Foreign currency-based transactions produced an expense of $9.3 million and an expense of $6.8 in 2025 and 2024, respectively. The results in 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.

Income Taxes

The provision for income taxes 2025 and 2024 were $46.0 million and $50.2 million, respectively. The effective tax rate for 2025 was about 24 percent before and after the impact of discrete events. The effective tax rate for 2024 was about 22 percent and included a favorable benefit from discrete events of 1 percent. The effective tax rate differs from the U.S. statutory rate of 21 percent primarily due to foreign earnings taxed at rates higher than the U.S. statutory rate, U.S. state taxes, Pillar Two Global Minimum Tax, and nondeductible officer’s compensation, which were partially offset by an object exemption of foreign business profits in the Netherlands, the recognition of the U.S. foreign-derived intangible income (FDII) provisions, certain incentives, and discrete events.

Net Income

Net income for 2025 was $148.7 million compared to 2024 net income of $181.6 million. Net income attributable to Franklin Electric Co., Inc. for 2025 was $147.1 million, or $3.22 per diluted share, compared to 2024 net income attributable to Franklin Electric Co., Inc. of $180.3 million, or $3.86 per diluted share.

CAPITAL RESOURCES AND LIQUIDITY

Sources of Liquidity

The Company's primary sources of liquidity are cash on hand, cash flows from operations, revolving credit agreements, and long-term debt funds available. The Company believes its capital resources and liquidity position at December 31, 2025 is adequate to meet projected needs for the foreseeable future. The Company expects that ongoing requirements for operations,

capital expenditures, pension obligations, dividends, share repurchases, and debt service will be adequately funded from cash on hand, operations, and existing credit agreements.

As of December 31, 2025, the Company had a $350.0 million revolving credit facility. The facility is scheduled to mature on May 14, 2030. As of December 31, 2025, the Company had $313.6 million borrowing capacity under the Credit Agreement as $6.4 million in letters of commercial and standby letters of credit were outstanding and undrawn and $30.0 million in revolver borrowings were drawn or outstanding.

In addition, the Company maintains an uncommitted and unsecured private shelf agreement with NYL Investors LLC, an affiliate of New York Life, and each of the undersigned holders of Notes (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. On September 26, 2025, the Company issued and sold $75.0 million of fixed rate senior notes due September 26, 2032. As of December 31, 2025, the remaining borrowing capacity on the New York Life Agreement was $175.0 million. The Company also maintains an uncommitted and unsecured note purchase and private shelf agreement with PGIM, Inc. and its affiliates (the "Prudential 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 $150.0 million. On September 26, 2025, the Company issued and sold $50.0 million of fixed rate senior notes due September 26, 2032.

At December 31, 2025, the Company had $67.3 million of cash and cash equivalents held in foreign jurisdictions, which the Company intends to use to fund foreign operations. There is currently no need to repatriate these funds in order to meet domestic funding obligations or scheduled cash distributions.

Cash Flows

The following table summarizes significant sources and uses of cash and cash equivalents:


(in millions)	2025		2024
Cash flows from operating activities	$	238.9	$	261.4
Cash flows from investing activities	$	(157.1)	$	(45.6)
Cash flows from financing activities	$	(197.3)	$	(74.1)
Impact of exchange rates on cash and cash equivalents	$	(5.3)	$	(6.1)
Change in cash and cash equivalents	$	(120.9)	$	135.6

Cash Flows from Operating Activities

2025 vs 2024

Net cash provided by operating activities was $238.9 million for 2025 compared to $261.4 million for 2024. The change in operating cash flow was primarily attributable to changes in working capital offset by an increase in cash earnings.

Cash Flows from Investing Activities

2025 vs. 2024

Net cash used in investing activities was $157.1 million in 2025 compared to $45.6 million in 2024. The change in investing cash flow was primarily attributable to increased acquisition activity in 2025.

Cash Flows from Financing Activities

2025 vs. 2024

Net cash used by financing activities was $197.3 million in 2025 compared to $74.1 million in 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.

AGGREGATE CONTRACTUAL OBLIGATIONS

The majority of the Company’s contractual obligations to third parties relate to debt obligations. In addition, the Company has certain contractual obligations for future lease payments and purchase obligations. The payment schedule for these contractual obligations is as follows:


(In millions)									More than
	Total		2026		2027-2028		2029-2030		5 years
Debt	$	167.1	$	31.8	$	3.0	$	3.1	$	129.2
Debt interest	49.5		8.5		14.4		13.8		12.8

Operating leases	77.6		24.4		31.0		13.5		8.7
Purchase obligations	8.5		8.5		—		—		—

	$	302.7	$	73.2	$	48.4	$	30.4	$	150.7

Interest payments on debt obligations are calculated for future periods using interest rates in effect at the end of 2025. Certain of these projected interest payments may differ in the future based on interest rates or other factors or events. The projected interest payments only pertain to obligations and agreements outstanding at December 31, 2025.

The Company has pension and other post-retirement benefit obligations not included in the table above which will result in estimated future payments of approximately $6.2 million in 2026. In addition, due to the timing of funding in future periods being uncertain and dependent on future movements in interest rates, investment returns, changes in laws and regulations and other variables, the table above excludes the non-current liability of $17.0 million for cash outflows related to the Company's pension plans.

The Company also has unrecognized tax benefits, none of which are included in the table above. The unrecognized tax benefits of approximately $3.0 million have been recorded as liabilities and the Company is uncertain as to if or when such amounts may be settled. Related to the unrecognized tax benefits, the Company has also recorded a liability for potential penalties and interest of $1.1 million.

ACCOUNTING PRONOUNCEMENTS

For information regarding recent accounting pronouncements, refer to Note 2 - Accounting Pronouncements, in the Notes to Consolidated Financial Statements in the sections entitled "Adoption of New Accounting Standards" and "Accounting Standards Issued But Not Yet Adopted", included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

Management’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Management evaluates estimates on an ongoing basis. Estimates are based on historical experience and on other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There were no material changes to estimates or methodologies used to develop those estimates in 2025. The Company’s critical accounting estimates are identified below:

Inventory Valuation

The Company uses certain estimates and judgments to value inventory. Inventory is recorded at the lower of cost or net realizable value. The Company reviews its inventories for excess or obsolete products or components. Based on an analysis of historical usage, management’s evaluation of estimated future demand, market conditions, and alternative uses for possible excess or obsolete parts, carrying values are adjusted. The carrying value is reduced regularly to reflect the age and current anticipated product demand. If actual demand differs from the estimates, additional reductions would be necessary in the period such determination is made. Excess and obsolete inventory is periodically disposed of through sale to third parties, scrapping, or other means.

Business Combinations and Valuation of Acquired Intangible Assets

The Company follows the guidance under FASB ASC Topic 805, Business Combinations. The acquisition purchase price is allocated to the assets acquired and liabilities assumed based upon their respective fair values. The Company utilizes management estimates and may use an independent third-party valuation firm to assist in determining the fair values of assets

acquired, including intangible assets, and liabilities assumed. The identifiable intangible assets acquired typically include customer relationships and trade names. Identifiable intangible assets are initially valued using a methodology commensurate with the intended use of the asset. The fair value of customer relationships is measured using the multi-period excess earnings method ("MPEEM"). The fair value of trade names is measured using a relief-from-royalty ("RFR") approach, which assumes the value of the trade name is the discounted amount of cash flows that would be paid to third parties had the Company not owned the trade name and instead licensed the trade name from another company. Higher royalty rates are assigned to premium brands within the marketplace based on name recognition and profitability, while other brands receive lower royalty rates. The basis for future sales projections for both the RFR and MPEEM are based on internal revenue forecasts which the Company believes represents reasonable market participant assumptions. The future cash flows are discounted using an applicable discount rate as well as any potential risk premium to reflect the inherent risk of holding a standalone intangible asset. The key uncertainties in the RFR and MPEEM calculations, as applicable, are the selection of an appropriate royalty rate, assumptions used in developing estimates of future cash flows, including revenue growth and expense forecasts, assumed customer attrition rates, as well as the perceived risk associated with those forecasts in determining the discount rate and risk premium. There is inherent uncertainty in forecasted future cash flows and therefore, actual results may differ and could result in subsequent impairment charges of acquired intangible assets and/or goodwill.

Indefinite-Lived Intangible Asset and Goodwill Impairment Evaluation

According to FASB ASC Topic 350, Intangibles - Goodwill and Other, goodwill and other intangible assets with indefinite lives must be tested for impairment at least annually or more frequently as warranted by triggering events that indicate potential impairment. The Company has the option to assess goodwill and other indefinite-lived intangible assets for impairment by initially performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount. If the Company determines that it is not more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount, then a quantitative impairment test is not required to be performed. If the Company determines that it is more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount, or if it does not elect the option to perform an initial qualitative assessment, it performs a quantitative impairment test.

The Company uses a variety of methodologies in conducting impairment assessments including qualitative reviews as well as quantitative reviews using the income and market approaches.

The market value approach compares the reporting units’ current and projected financial results to entities of similar size and industry to determine the market value of the reporting unit. The income approach utilizes assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These cash flows consider factors regarding expected future operating income and historical trends, as well as the effects of demand and competition. The future cash flows are discounted using an applicable discount rate. The Company is required to record an impairment if these assumptions and estimates change whereby the fair value of the reporting units or indefinite-lived intangible assets are below their associated carrying values.

During the fourth quarter of 2025, the Company completed its annual impairment tests of goodwill and indefinite-lived trade names. The Company determined that the fair value of goodwill and all intangibles were substantially in excess of the respective carrying values. A 10 percent decrease in the estimated fair value of goodwill or any of the indefinite-lived trade names would not have changed this determination. The sensitivity analysis required the use of numerous subjective assumptions, which, if actual experience varies, could result in material differences in the requirements for impairment charges. Further, an extended downturn in the economy may impact certain components of the operating segments more significantly and could result in an impairment determination.

Income Taxes

Under the requirements of FASB ASC Topic 740, Income Taxes, the Company records deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company analyzes the deferred tax assets and liabilities for their future realization based on the estimated existence of sufficient taxable income. This analysis considers the following sources of taxable income: prior year taxable income, future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and tax planning strategies that would generate taxable income in the relevant period. If sufficient taxable income is not projected then the Company will record a valuation allowance against the relevant deferred tax assets.

The Company’s operations involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. These jurisdictions have different tax rates, and the Company determines the allocation of income to each

of these jurisdictions based upon various estimates and assumptions. In the normal course of business, the Company will undergo tax audits by various tax jurisdictions. Such audits often require an extended period of time to complete and may result in income tax adjustments if changes to the allocation are required between jurisdictions with different tax rates. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in the various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. Although the Company has recorded all income tax uncertainties in accordance with FASB ASC Topic 740, these accruals represent estimates that are subject to the inherent uncertainties associated with the tax audit process. Management judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities, which, if actual experience varies, could result in material adjustments to tax expense and/or deferred tax assets and liabilities.

Pension and Employee Benefit Obligations

The Company consults with its actuaries to assist with the calculation of discount rates used in its pension and post retirement plans. The discount rates used to determine domestic pension and post-retirement plan liabilities are calculated using a full yield curve approach. The weighted-average discount rate was 5.48 percent last year compared to 4.07 percent this year for the domestic pension plans and from 5.47 percent last year to 5.04 percent this year for the postretirement health and life insurance plan. A change in the discount rate selected by the Company of 25 basis points would result in no material change to employee benefit expense and a change of about $0.2 million of liability.

One of the Company's domestic defined benefit plans was settled and terminated in 2025. For additional information, see note 10 - Employee Benefit Plans.

FACTORS THAT MAY AFFECT FUTURE RESULTS

This annual report on Form 10-K contains certain forward-looking information, such as statements about the Company’s financial goals, acquisition strategies, financial expectations including anticipated revenue or expense levels, business prospects, market positioning, product development, manufacturing re-alignment, capital expenditures, tax benefits and expenses, and the effect of contingencies or changes in accounting policies. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may increase,” “may fluctuate,” “plan,” “goal,” “target,” “strategy,” and similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” While the Company believes that the assumptions underlying such forward-looking statements are reasonable based on present conditions, forward-looking statements made by the Company involve risks and uncertainties and are not guarantees of future performance. Actual results may differ materially from those forward-looking statements as a result of various factors, including general economic and currency conditions, various conditions specific to the Company’s business and industry, new housing starts, weather conditions, epidemics and pandemics, 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, and other risks, all as described in Item 1A and Exhibit 99.1 of this Form 10-K. Any forward-looking statements included in this Form 10-K are based upon information presently available. The Company does not assume any obligation to update any forward-looking information, except as required by law.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to market risk associated with changes in foreign currency exchange rates, interest rates, and commodity prices. These exposures are actively monitored by management. Exposure to foreign exchange rate risk is due to certain costs, revenue and borrowings being denominated in currencies other than one of the Company’s subsidiaries' functional currency. Similarly, the Company is exposed to market risk as the result of changes in interest rates which may affect the cost of financing.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate risk is mitigated through several means including maintenance of local production facilities in the markets served, invoicing of customers in the currency which the Company is billed for production inputs, prompt settlement of third party and intercompany balances, limited use of foreign currency denominated debt, maintaining minimal foreign currency denominated cash balances, and application of derivative instruments when appropriate. Based on the 2025 mix of foreign currencies, the Company estimates that a hypothetical strengthening of the US Dollar by about 2 percent would have reduced the Company’s 2025 sales by less than 1 percent.

Interest Rate Risk

The results of operations are exposed to changes in interest rates primarily with respect to borrowings under the Company’s revolving credit agreement (the “Credit Agreement”). Borrowings in USD under the Credit Agreement may be made either at (i) a Secured Overnight Financing Rate (SOFR) Term Benchmark plus an applicable margin or (ii) an alternative base rate as defined in the Credit Agreement. Borrowings in EUR under the Credit Agreement may be made either at (i) a Euro Interbank Offer Rate (EURIBOR) Term Benchmark plus an applicable margin or (ii) an alternative base rate as defined in the Credit Agreement. The Company had $30.0 million borrowings at year-end 2025 under the Credit Agreement. The Company estimates that a hypothetical increase of 100 basis points in interest rates would have increased interest expense by $1.2 million during 2025. The Company also has exposure to changes in interest rates in the form of the fair value of outstanding fixed rate debt fluctuating in response to changing interest rates.

Commodity Price Exposures

Portions of the Company’s business are exposed to volatility in the prices of certain commodities, such as copper, steel and aluminum, among others. The primary exposure to this volatility resides with the use of these materials in purchased component parts. The Company generally maintains long-term fixed price contracts on raw materials and component parts; however, the Company is prone to exposure as these contracts expire. Based on the 2025 use of commodities, the Company estimates that a hypothetical 10 percent adverse movement in prices for raw metal commodities would result in less than 1 percent decrease of gross margin as a percent of net sales.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


(In thousands, except per share amounts)	2025		2024		2023

Net sales	$	2,131,250	$	2,021,341	$	2,065,133
Cost of sales	1,375,325		1,304,061		1,368,125
Gross profit	755,925		717,280		697,008
Selling, general, and administrative expenses	486,231		470,136		433,476
Restructuring expense	716		3,499		1,091
Operating income	268,978		243,645		262,441
Interest expense	(10,641)		(6,319)		(11,790)
Other income, net	585		1,339		3,696
Foreign exchange expense, net	(9,340)		(6,818)		(12,124)
Pension settlement loss	(54,932)		—		—
Income before income taxes	194,650		231,847		242,223
Income tax expense	45,956		50,238		47,489
Net income	$	148,694	$	181,609	$	194,734
Less: Net income attributable to noncontrolling interests	(1,604)		(1,300)		(1,462)
Net income attributable to Franklin Electric Co., Inc.	$	147,090	$	180,309	$	193,272
Earnings per share:
Basic	$	3.25	$	3.92	$	4.17
Diluted	$	3.22	$	3.86	$	4.11

See Notes to Consolidated Financial Statements.

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(In thousands)	2025		2024		2023

Net income	$	148,694	$	181,609	$	194,734
Other comprehensive income/(loss), before tax:
Foreign currency translation adjustments	48,894		(35,879)		12,026
Employee benefit plan activity:

Net gain/(loss) arising during period	7,693		1,492		(4,449)
Amortization arising during period	760		2,282		2,148
Pension settlement	54,932		—		—
Other comprehensive income/(loss)	112,279		(32,105)		9,725
Income tax benefit/(expense) related to items of other comprehensive income/(loss)	(15,659)		(938)		643
Other comprehensive income/(loss), net of tax	96,620		(33,043)		10,368
Comprehensive income	245,314		148,566		205,102
Less: Comprehensive income attributable to noncontrolling interests	(1,706)		(1,146)		(1,496)
Comprehensive income attributable to Franklin Electric Co., Inc.	$	243,608	$	147,420	$	203,606

See Notes to Consolidated Financial Statements.

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


(In thousands, except per share amounts)	2025		2024
ASSETS
Current assets:
Cash and cash equivalents	$	99,662	$	220,540
Receivables, less allowances of $3,821 and $3,547, respectively	247,511		226,826
Inventories:
Raw material	189,380		160,875
Work-in-process	27,750		24,997
Finished goods	335,851		298,003
Total inventories	552,981		483,875
Other current assets	58,472		32,950
Total current assets	958,626		964,191
Property, plant, and equipment, at cost:
Land and buildings	179,681		161,860
Machinery and equipment	354,833		316,454
Furniture and fixtures	63,601		58,300
Other	79,172		67,004
Property, plant, and equipment, gross	677,287		603,618
Less: Allowance for depreciation	(425,123)		(380,052)
Property, plant, and equipment, net	252,164		223,566
Lease right-of-use assets, net	67,867		62,637

Deferred income taxes	6,582		8,210
Intangible assets, net	251,692		212,973
Goodwill	398,127		338,501
Other assets	9,327		10,528
Total assets	$	1,944,385	$	1,820,606
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	174,954	$	157,046
Accrued expenses and other current liabilities	107,975		119,771
Current lease liability	20,518		18,878
Income taxes	8,772		20,218
Current maturities of long-term debt and short-term borrowings	31,827		117,814
Total current liabilities	344,046		433,727
Long-term debt	135,184		11,622
Long-term lease liability	46,481		43,304

Deferred income taxes	39,275		10,193
Employee benefit plans	22,833		29,808
Other long-term liabilities	29,541		22,118
Commitments and contingencies (see Note 7)
Redeemable noncontrolling interest	1,657		1,224
Shareholders’ equity:
Common stock (65,000 shares authorized, $0.10 par value) outstanding (44,178 and 45,716, respectively)	4,418		4,571
Additional paid-in capital	391,496		363,956
Retained earnings	1,084,149		1,151,575
Accumulated other comprehensive loss	(157,484)		(254,003)
Total shareholders’ equity	1,322,579		1,266,099
Noncontrolling interest	2,789		2,511
Total equity	1,325,368		1,268,610
Total liabilities and equity	$	1,944,385	$	1,820,606

See Notes to Consolidated Financial Statements.

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)	2025		2024		2023
Cash flows from operating activities:
Net income	$	148,694	$	181,609	$	194,734
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	62,875		56,073		52,260
Pension settlement loss, net of tax	41,454		—		—
Non-cash lease expense	22,489		21,438		18,852
Share-based compensation	13,196		12,061		10,133

Deferred income taxes	(7,644)		(19,648)		(1,609)
Gain on disposals of plant and equipment	(2,141)		(497)		(256)


Foreign exchange expense, net	9,340		6,818		12,124

Changes in assets and liabilities, net of acquisitions:
Receivables	11,417		(17,045)		19,150
Inventory	(26,179)		10,889		48,176
Accounts payable and accrued expenses	(12,772)		15,285		(23,085)
Operating leases	(22,901)		(21,129)		(18,874)
Income taxes	(5,236)		15,755		(1,524)
Income taxes-U.S. Tax Cuts and Jobs Act	(4,837)		(3,870)		(2,902)
Employee benefit plans	(4,697)		466		1,458
Other, net	15,820		3,148		7,073
Net cash flows from operating activities	238,878		261,353		315,710
Cash flows from investing activities:
Additions to property, plant, and equipment	(45,337)		(41,682)		(41,415)
Proceeds from sale of property, plant, and equipment	2,856		1,182		1,494
Cash paid for acquisitions, net of cash acquired	(114,664)		(5,201)		(34,831)


Other, net	20		73		463
Net cash flows from investing activities	(157,125)		(45,628)		(74,289)
Cash flows from financing activities:
Proceeds from issuance of debt	600,208		309,747		443,217
Repayments of debt	(581,514)		(280,512)		(558,746)
Payment of debt issuance costs	(974)		—		—
Proceeds from issuance of common stock	5,321		7,204		9,193

Purchases of common stock	(165,623)		(61,041)		(43,332)
Dividends paid	(49,999)		(46,876)		(41,723)

Deferred payments for acquisitions	(4,725)		(2,591)		(802)
Net cash flows from financing activities	(197,306)		(74,069)		(192,193)
Effect of exchange rate changes on cash and cash equivalents	(5,325)		(6,079)		(10,055)
Net change in cash and cash equivalents	(120,878)		135,577		39,173
Cash and cash equivalents at beginning of period	220,540		84,963		45,790

Cash and cash equivalents at end of period	$	99,662	$	220,540	$	84,963



Cash paid for income taxes, net of refunds	$	76,676	$	58,024	$	55,120
Cash paid for interest	$	9,847	$	6,423	$	12,115

Non-cash items:
Additions to property, plant, and equipment, not yet paid	$	628	$	1,748	$	2,229
Lease right-of-use assets obtained in exchange for new operating lease liabilities	$	26,889	$	30,796	$	25,899
Payable to sellers of acquired entities	$	2,180	$	1,750	$	7,027
Issuance of common stock - deferred Board of Director compensation	9,055		—		—

Non-cash investment to acquire property in lieu of cash payment for products provided	$	—	$	—	$	419
Accrued dividends payable to noncontrolling interests	$	—	$	961	$	821

See Notes to Consolidated Financial Statements.

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY


	Total Shareholders’ Equity
(In thousands)	Common Shares Outstanding	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Noncontrolling Interest		Redeemable Noncontrolling Interest
Balance as of year-end 2022	46,193	$	4,619	$	325,426	$	969,261	$	(231,448)	$	2,276	$	620
Net Income	—	—		—		193,272		—		935		527
Currency translation adjustment	—	—		—		—		11,992		36		(2)
Pension and other post retirement plans, net of tax benefit $643	—	—		—		—		(1,658)		—		—



Dividends on common stock ($0.90/share)	—	—		—		(41,723)		—		—		—
Dividend to noncontrolling interest	—	—		—		—		—		(821)		—
Common stock issued	216	22		9,171		—		—		—		—
Share-based compensation	131	13		10,120		—		—		—		—
Common stock repurchased	(473)	(47)		—		(42,298)		—		—		—
Balance as of year-end 2023	46,067	$	4,607	$	344,717	$	1,078,512	$	(221,114)	$	2,426	$	1,145
Net Income	—	—		—		180,309		—		1,193		107
Currency translation adjustment	—	—		—		—		(35,725)		(147)		(7)
Pension and other post retirement plans, net of tax expense $938	—	—		—		—		2,836		—		—


Dividends on common stock ($1.00/share)	—	—		—		(46,020)		—		—		—
Dividend to noncontrolling interest	—	—		—		—		—		(961)		(21)
Common stock issued	153	15		7,189		—		—		—		—
Share-based compensation	119	11		12,050		—		—		—		—
Common stock repurchased	(623)	(62)		—		(61,226)		—		—		—
Balance as of year-end 2024	45,716	$	4,571	$	363,956	$	1,151,575	$	(254,003)	$	2,511	$	1,224
Net Income	—	—		—		147,090		—		1,176		428
Currency translation adjustment	—	—		—		—		48,792		69		33
Pension and other post retirement plans, net of tax expense $15,659	—	—		—		—		47,727		—		—


Dividends on common stock ($1.06/share)	—	—		—		(48,042)		—		—		—
Dividend to noncontrolling interest	—	—		—		—		—		(967)		(28)
Common stock issued	197	20		14,356		—		—		—		—
Share-based compensation	110	12		13,184		—		—		—		—
Common stock repurchased	(1,845)	(185)		—		(166,474)		—		—		—
Balance as of year-end 2025	44,178	$	4,418	$	391,496	$	1,084,149	$	(157,484)	$	2,789	$	1,657

See Notes to Consolidated Financial Statements.

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

INDEX TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


		Page Number

Note 1.	Summary of Significant Accounting Policies	29
Note 2.	Accounting Pronouncements	33
Note 3.	Acquisitions	34
Note 4.	Goodwill and Other Intangible Assets	36
Note 5.	Accrued Expense and Other Current Liabilities	36
Note 6.	Debt	37
Note 7.	Commitments and Contingencies	39
Note 8.	Shareholders' Equity	40
Note 9.	Accumulated Other Comprehensive Income/(Loss)	43
Note 10.	Employee Benefit Plans	43
Note 11.	Income Taxes	48
Note 12.	Earnings per Share	52
Note 13.	Financial Instruments	52
Note 14.	Fair Value Measurements	53
Note 15.	Segment and Geographic Information	54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Company--“Franklin Electric” or the “Company” shall refer to Franklin Electric Co., Inc. and its consolidated subsidiaries.

Fiscal Year--The financial statements and accompanying notes are as of and for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, and referred to as 2025, 2024 and 2023, respectively.

Principles of Consolidation--The consolidated financial statements include the accounts of Franklin Electric Co., Inc. and its consolidated subsidiaries. All intercompany transactions have been eliminated.

Business Combinations--The Company allocates the purchase price of its acquisitions to the assets acquired, liabilities assumed, and noncontrolling interests based upon their respective fair values at the acquisition date. The Company utilizes management estimates and may use inputs from an independent third-party valuation firm to assist in determining these fair values. The excess of the acquisition price over estimated fair values of the net assets acquired is recorded as goodwill. Goodwill is adjusted for any changes to acquisition date fair value amounts made within the measurement period, which may be up to one year from the acquisition date. If the preliminary, estimated fair values of the net assets acquired are in excess of the acquisition price, that represents a bargain purchase gain, and the Company records this amount in "Accrued expenses and other current liabilities" on the consolidated balance sheet until it completes its determination of fair values for the net assets acquired. Once that fair value determination is completed, the bargain purchase gain is recognized on the consolidated statements of income in "Other income, net". Acquisition-related transaction costs are recognized separately from the business combination and expensed as incurred.

Revenue Recognition--Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The promise in a contract to transfer goods or services to a customer represents a performance obligation. The Company typically sells its products to customers by purchase order and does not have any additional performance obligations included in contracts to customers. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation. Therefore, the Company allocates the transaction price based on a single performance obligation. The Company typically ships products Free on Board (FOB) shipping point at which point control of the products passes to the customers. The Company considers the performance obligation satisfied and recognizes revenue at a point in time, the time of shipment. The Company applies a practical expedient to expense as incurred costs to obtain a contract with a customer when the amortization period would have been one year or less as well as applies the financing component practical expedient when the duration of the financing is one year or less.

The Company’s products may include routine assurance-type warranties which do not qualify as separate performance obligations. In the event that significant post-shipment obligations were to exist for the Company’s products, revenue recognition would be deferred until the performance obligations were satisfied.

The Company records net sales after discounts at the time of sale based on specific discount programs in effect, related historical data, and experience.

The following table disaggregates the Company's net sales from contracts with customers by segment:


Net Sales
(In millions)	2025		2024		2023
Water Systems
External sales
United States & Canada	$	607.9	$	586.6	$	636.0
Latin America	204.7		170.9		174.2
Europe, Middle East & Africa	218.1		211.4		198.3
Asia Pacific	100.9		93.2		86.8
Intersegment sales
United States & Canada	124.8		121.9		108.4
Total sales	1,256.4		1,184.0		1,203.7
Distribution
External sales
United States & Canada	700.7		685.5		673.3

Total sales	700.7		685.5		673.3
Energy Systems
External sales
United States & Canada	229.0		212.4		220.9
All other	70.0		61.3		75.6

Total sales	299.0		273.7		296.5

Intersegment Eliminations/Other	(124.8)		(121.9)		(108.4)
Consolidated	$	2,131.3	$	2,021.3	$	2,065.1

Shipping and Handling Costs--Shipping and handling costs are considered activities required to fulfill the Company’s promise to transfer goods, and do not qualify as a separate performance obligation. Shipping and handling costs in the Company's Water Systems and Energy Systems segments are recorded as a component of cost of sales whereas shipping and handling costs in the Company's Distribution segment are recorded as a component of selling, general and administrative expenses.

Research and Development Expense--The Company’s research and development activities are charged to expense in the period incurred. The Company incurred expenses of approximately $20.0 million in 2025, $21.5 million in 2024, and $17.7 million in 2023 related to research and development.

Cash and Cash Equivalents--The Company considers cash on hand, demand deposits, and highly liquid investments with an original maturity date of three months or less to be cash and cash equivalents.

Fair Value of Financial Instruments--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.

Accounts Receivable, Earned Discounts, and Allowance for Credit Losses--Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers, net of earned discounts and estimated allowances for credit losses. Earned discounts are based on specific customer agreement terms. In determining allowances for credit losses, historical collection experience, current trends and reasonable, supportable future forecasts, aging of accounts receivable, and periodic credit evaluations of customers’ financial condition are reviewed.

Inventories--Inventories are stated at the lower of cost or net realizable value. The majority of the cost of inventories is determined using the first in, first out (FIFO) method with a portion of inventory costs determined using the average cost method. The Company reviews its inventories for excess or obsolete products or components based on an analysis of historical usage and management’s evaluation of estimated future demand, market conditions, and alternative uses for possible excess or obsolete parts.

Property, Plant, and Equipment--Property, plant, and equipment are stated at historical cost. The Company capitalizes certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use, which are included in property, plant, and equipment. Depreciation of property, plant and equipment is calculated on a straight line basis over the following estimated useful lives:


Land improvement and buildings			10 - 40 years
Machinery and equipment			5 - 10 years
Software			3 - 7 years
Furniture and fixtures			3 - 7 years

Maintenance, repairs, and renewals of a minor nature are expensed as incurred. Betterments and major renewals which extend the useful lives or add to the productive capacity of buildings, improvements, and equipment are capitalized. The Company reviews its property, plant, and equipment for impairment at the asset group level whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If an indicator is present, the Company compares carrying values to undiscounted future cash flows; if the undiscounted future cash flows are less than the carrying value, an impairment would be recognized for the difference between the fair value and the carrying value.

The Company’s depreciation expense was $39.3 million, $37.2 million, and $35.1 million in 2025, 2024, and 2023, respectively.

Leases--The Company determines if an arrangement is a lease, or contains a lease, at the inception of the arrangement and determines whether it is an operating or financing lease. Operating and financing leases result in the Company recording a right-of-use ("ROU") asset, current lease liability, and long term lease liability on its balance sheet. The Company has elected to not present leases with an initial term of 12 months or less on the balance sheet. The ROU assets and liabilities are initially recognized based on the present value of lease payments over the lease term. Initial direct costs and lease incentives are generally not material when measuring the ROU asset present value. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

In determining the present value of the ROU liability, the Company utilizes interest rates from lease agreements unless the lease agreement does not provide a readily determinable rate. In these instances, the Company utilizes its incremental borrowing rate based on the Company’s borrowing information available at inception of the lease. A portion of the Company’s leases include renewal options. The Company excludes these renewal options in the expected lease term unless the Company is reasonably certain that the option will be exercised. In addition, the Company has elected not to separate non-lease components from lease components when initially recording the ROU asset and liability.

Goodwill and Other Intangible Assets--Goodwill is the excess of the purchase price over the fair value of acquired assets and liabilities in a business combination. Goodwill is not amortized but is subject to an impairment review annually and whenever indicators of impairment exist. The Company has the option to assess goodwill for impairment by initially performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is not required to be performed. If the Company determines that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, or if it does not elect the option to perform an initial qualitative assessment, the Company performs a quantitative goodwill impairment test. In the quantitative impairment test, the Company calculates the estimated fair value of the reporting unit. If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded for the amount that its carrying amount, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.

Indefinite-lived intangible assets, such as certain trade names with indefinite lives, are subject to an impairment review annually and whenever indicators of impairment exist. The Company has the option to assess indefinite-lived intangible assets for impairment by first performing qualitative assessments to determine whether it is more-likely-than-not that the fair values of the indefinite-lived intangible assets are less than the carrying amounts. If the Company determines that it is more-likely-than-not that an indefinite-lived intangible asset is impaired, or if the Company elects not to perform an initial qualitative assessment, the Company then performs the quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying amount. If the carrying amount exceeds the fair value of the indefinite-lived intangible asset, the Company writes the carrying amount down to the fair value.

Amortization is recorded and calculated for definite-lived intangible assets on a basis that reflects cash flows over the estimated useful lives. The estimated useful lives over which each intangible class is amortized is as follows:


Customer relationships			8 - 20 years
Patents			17 years

Technology			15 years
Trade names			5 - 20 years
Other			5 - 8 years

Definite-lived intangible assets are evaluated for impairment whenever a triggering event, including a significant change in the use of the asset or unexpected change in financial condition, occurs that indicates the carrying value may be impaired. The Company tests for impairment at the asset group level by comparing the carrying value of an asset group that includes the applicable definite lived intangible asset(s) to that asset group's undiscounted future cash flows. An impairment exists if the carrying value of the definite-lived intangible asset(s) is higher than the fair value, and the Company would record an impairment charge for the difference.

Warranty Obligations--The Company provides warranties on most of its products. The warranty terms vary but are generally 2 years to 5 years from the date of manufacture or 1 year to 5 years from the date of installation. Provisions for estimated expenses related to product warranty are made at the time products are sold or when specific warranty issues are identified. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims. The Company actively studies trends of warranty claims and takes actions to improve product quality and minimize warranty claims.

Income Taxes--Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities and net operating loss and credit carry forwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company records a liability for uncertain tax positions by establishing a more likely than not recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return.

Defined Benefit Plans--The Company makes its determination for pension, post retirement, and post employment benefit plans liabilities based on management estimates and consultation with actuaries. The Company incorporates estimates and assumptions of future plan service costs, future interest costs on projected benefit obligations, rates of compensation increases, employee turnover rates, anticipated mortality rates, expected investment returns on plan assets, asset allocation assumptions of plan assets, and other factors.

Earnings Per Common Share--The Company utilizes the two-class method to compute earnings available to common shareholders. Under the two-class method, the Company allocates net earnings 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 allocated 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 allocable 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 and non-employee deferred shares.

Translation of Foreign Currency Financial Statements--All assets and liabilities of foreign subsidiaries in functional currency other than the U.S. dollar are translated at year end exchange rates with the exception of the non-monetary assets and liabilities

in countries with highly inflationary economies, which are translated at historical exchange rates. All revenue and expense accounts are translated at average rates in effect during the respective period with the exception of expenses related to the non-monetary assets and liabilities, which are translated at historical exchange rates. Adjustments for translating longer term foreign currency assets and liabilities in U.S. dollars are included as a component of other comprehensive income/(loss) except for hyperinflation accounting adjustments. Transaction gains and losses that arise from shorter term exchange rate fluctuations and hyperinflation accounting adjustments are included in “Foreign exchange expense, net” within the Company’s consolidated statements of income, as incurred. The Company's operations in Argentina and Turkey have been accounted for using the highly inflationary accounting rules since 2018 and 2022, respectively.

Significant Estimates--The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Although the Company regularly assesses these estimates, actual results could materially differ. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.

2. ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

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 adopted this ASU prospectively, effective with its 2025 annual financial statements and the adoption did not have a material impact on its financial statements.

Accounting Standards Issued But Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosure of the nature of expenses included in the income statement. The standard requires disclosures about specific types of expenses included in the expense captions presented in the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The requirements should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 provides an optional practical expedient to simplify the measurement of credit losses for certain receivables and contract assets. ASU 2025-05 is effective for interim and annual periods beginning after December 15, 2025, with early adoption permitted. The guidance is to be applied prospectively. The Company will adopt this ASU in 2026 and does not anticipate the adoption to have material impact on the Company's financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 removes all references to software development project stages and requires entities to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. The guidance can be applied prospectively, retrospectively, or utilizing a modified transition method. The Company is currently evaluating the impact of this ASU on the Company's financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. ASU 2025-11 amends the existing guidance in ASC 270 to clarify the applicability, form, and content of interim financial statements and to improve the organization and usability of interim reporting requirements. The amendments introduce a disclosure principle requiring entities to provide information about events and changes that occur since the most recent annual reporting

period that could have a material impact on the entity. This ASU also compiles interim disclosure requirements within ASC 270 and other Topics into a single location. ASU 2025-11 is effective for interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact of this ASU on the Company’s financial statements and disclosures.

3. ACQUISITIONS

2025

Barnes

In March 2025, the Company acquired 100 percent of Barnes de Colombia S.A. ("Barnes"), a leading manufacturer and distributor of industrial and commercial pumps based in Cota, Cundinamarca, Colombia, for total upfront cash consideration of $96.8 million, net of cash acquired.

The valuation of assets acquired and liabilities assumed has not yet been finalized as of December 31, 2025. As a result, the Company recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as of the acquisition date. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value of intangible assets, goodwill and income taxes among other items. The completion of the valuation will occur no later than one year from the acquisition date. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date:


(in millions)
Assets acquired and liabilities assumed
Cash and cash equivalents	$	3.4
Receivables	$	9.6
Inventories	$	23.6
Other current assets	$	3.9
Property, plant and equipment	$	13.5
Goodwill	$	44.5
Other intangible assets	$	45.5

Other non-current assets	$	3.6
Debt	$	(13.8)
Accounts payable	$	(9.8)
Accrued expenses and other current liabilities	$	(2.4)


Deferred tax liabilities	$	(18.6)
Other non-current liabilities	$	(2.8)
Total assets acquired and liabilities assumed	$	100.2

The Company allocated $33.4 million of the total consideration to customer relationships with a useful life of 8 years, $9.3 million to trade names with a useful life of 11 years, and $2.8 million to developed technology with a useful life of 7 years. The fair values of the intangible assets were determined using the income approach. The Company considers the fair value of the intangible assets to be Level 3 measurements due to the significant estimates and assumptions used by management in establishing the estimated fair values. In 2025, the Company recorded various immaterial measurement period adjustments, resulting in a decrease to goodwill of $1.3 million. The measurement period adjustments did not have a significant impact on the Company’s results of operations.

The goodwill, which is not deductible for tax purposes, includes the value of an assembled workforce, potential future technologies as well as the overall strategic benefits provided to the Company’s product portfolio and is included in the Water Systems segment.

The results of operations of the acquired business have been included in the Company’s consolidated statement of income since the date the business was acquired. The Barnes acquisition contributed $38.8 million of net sales for the twelve months ended December 31, 2025 while the impact on net income was not significant. The Company has not presented pro forma financial information for the Barnes acquisition because its results are not material to the Company’s condensed consolidated financial statements.

PumpEng

In February 2025, the Company acquired 100 percent of the ownership interests of PumpEng Pty Ltd ("PumpEng") for a purchase price of AUD 24.0 million (approximately $15.0 million). PumpEng, based in Australia, specializes in the design, manufacture and service of submersible pumps for the mining sector. The fair value of the assets acquired and liabilities assumed is final as of December 31, 2025.

The Company has not included various disclosures for the PumpEng acquisition including presenting separate results of operations of the acquired company since the closing of the acquisition or combined pro forma financial information of the Company and the acquired business, as the Company does not consider the acquisition to be material.

2024

During the fourth quarter ended December 31, 2024, the Company acquired substantially all of the assets of FSHS Incorporated, a water treatment systems distributor. The all-cash purchase price for the acquisition was $4.5 million. The fair value of the assets acquired and liabilities assumed is final as of December 31, 2025.

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, all-cash 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 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.

During the first quarter ended March 31, 2023, the Company acquired substantially 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 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 all 2023 acquisitions was final as of December 31, 2024.

The Company has not included various disclosures for the 2023 through 2025 acquisitions including presenting separate results of operations of any 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 Company does not consider any of the acquisitions to be material individually or in the aggregate.

Transaction costs for all acquisition-related activity were expensed as incurred under the guidance of FASB ASC Topic 805, Business Combinations. Transaction costs are included in the "Selling, general, and administrative expenses" line of the Company’s consolidated statements of income and were $2.4 million for the year ended December 31, 2025, and immaterial for all other periods presented.

4. GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying amounts of the Company’s intangible assets, excluding goodwill, are as follows:


(In millions)	2025				2024
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizing intangibles:
Customer relationships	$	309.5	$	(149.7)	$	263.4	$	(128.8)
Patents	7.4		(7.4)		7.2		(7.2)

Technology	10.5		(7.8)		7.5		(7.5)
Trade names	58.6		(11.6)		44.5		(8.1)
Other	3.1		(2.5)		2.8		(2.4)
Total	$	389.1	$	(179.0)	$	325.4	$	(154.0)
Non-amortizing intangibles:
Trade names	41.6		—		41.6		—
Total intangibles	$	430.7	$	(179.0)	$	367.0	$	(154.0)

Amortization expense related to intangible assets for the years ended December 31, 2025, 2024, and 2023, was $23.6 million, $18.8 million, and $17.1 million, respectively.

Amortization expense for each of the five succeeding years is projected as follows:


(In millions)	2026		2027		2028		2029		2030
	$	24.0	$	22.5	$	21.9	$	20.9	$	20.3

The change in the carrying amount of goodwill by reportable segment for 2025 and 2024, is as follows:


(In millions)	Water Systems		Energy Systems		Distribution		Consolidated
Balance as of December 31, 2023	$	221.4	$	70.4	$	50.6	$	342.4
Acquisitions	0.8		—		—		0.8
Adjustments to prior year acquisitions	(1.0)		—		—		(1.0)
Foreign currency translation	(3.6)		(0.1)		—		(3.7)
Balance as of December 31, 2024	$	217.6	$	70.3	$	50.6	$	338.5

Acquisitions	55.2		—		—		55.2
Adjustments to prior year acquisitions	0.1		—		—		0.1
Foreign currency translation	4.1		0.2		—		4.3
Balance as of December 31, 2025	$	277.0	$	70.5	50.6		$	398.1

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of:


(In millions)	2025		2024
Salaries, wages, and commissions	$	49.2	$	49.0
Product warranty costs	9.1		9.0
Insurance	3.3		2.4
Employee benefits	20.7		19.9
Other	25.7		39.5
	$	108.0	$	119.8

6. DEBT

Debt consisted of the following:


(In millions)	2025		2024
New York Life Agreement	$	75.0	$	75.0
Prudential Agreement	50.0		—
Credit Agreement	30.0		41.4
Project Bonds	11.5		12.8

Foreign subsidiary debt	0.6		0.3

Less: unamortized debt issuance costs	(0.1)		(0.1)
	167.0		129.4
Less current maturities	(31.8)		(117.8)
Long-term debt	$	135.2	$	11.6

Debt outstanding at December 31, 2025, excluding unamortized debt issuance costs, matures as follows:


(In millions)	Total		2026		2027		2028		2029		2030		Thereafter
Debt	$	167.1	$	31.8	$	1.5	$	1.5	$	1.5	$	1.6	$	129.2

New York Life Agreement

On May 27, 2015, the Company entered into an uncommitted and unsecured private shelf agreement with NYL Investors LLC, an affiliate of New York Life, and each of the undersigned holders of Notes (the “New York Life Agreement”) for $150.0 million maximum aggregate principal borrowing capacity. On October 28, 2016, the Company entered into the First Amendment to the Note Purchase and Private Shelf Agreement. The Amendment was intended to make the covenants within the New York Life Agreement consistent with the covenants that were modified in the Third Amended and Restated Credit Agreement. On September 26, 2018, the Company entered into the Second Amendment to the Note Purchase and Private Shelf Agreement which increased the aggregate borrowing capacity to $200.0 million and authorized the issuance of $75.0 million of fixed rate senior noted due September 26, 2025. These senior notes bear an interest rate of 4.04 percent with interest-only payments due semi-annually. The proceeds from the issuance of the notes were used to pay off existing variable rate indebtedness with New York Life. On July 30, 2021, the New York Life agreement was renewed with an expiration date of July 30, 2024. On May 15, 2024, the Company entered into Amendment No. 1 to the renewal 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. On September 26, 2025, the Company issued and sold $75.0 million of fixed rate senior notes due September 26, 2032. These senior notes bear an interest rate of 5.01 percent with interest-only payments due semi-annually. The proceeds from the issuance of the notes were used to pay off existing variable interest rate indebtedness. As of December 31, 2025, there was $175.0 million of remaining borrowing capacity under the New York Life Agreement.

Prudential Agreement

On April 9, 2007, the Company entered into the uncommitted and unsecured Amended and Restated Note Purchase and Private Shelf Agreement (the “Prudential Agreement”) in the amount of $175.0 million. Under the Prudential Agreement, the Company issued notes in an aggregate principal amount of $110.0 million on April 30, 2007 (the “B-1 Notes”) and $40.0 million on September 7, 2007 (the “B-2 Notes”). The B-1 Notes and B-2 Notes bear a coupon of 5.79 percent and had, at issuance, an average life of 10 years with a final maturity in 2019. On July 22, 2010, the Company entered into Amendment No. 3 to the Prudential Agreement to increase its borrowing capacity by $25.0 million. On December 14, 2011, the Company entered into Amendment No. 4 to the Second Amended and Restated Note Purchase and Private Shelf Agreement to redefine the debt to EBITDA ratio covenant in order to be equivalent to that under the Agreement. On December 31, 2012, the Company and Prudential Insurance Company of America entered into an amendment to the Second Amended and Restated Note Purchase and Private Shelf Agreement to extend the effective date to December 31, 2015. On May 5, 2015, the Company entered into Amendment No. 6 to the Second Amended and Restated Note Purchase and Private Shelf Agreement. This amendment provided for debt repayment guarantees from certain Company subsidiaries and waived certain non-financial covenants related to subsidiary guarantees. On May 28, 2015, the Company entered into a Third Amended and Restated Note Purchase and Private Shelf Agreement with Prudential to increase the total borrowing capacity from $200.0 million to $250.0 million. On October 28, 2016, the Company entered into Amendment No. 1 to the Third Amended and Restated Note Purchase and Private Shelf Agreement. This amendment was intended to make the covenants within the Prudential Agreement consistent with the covenants that were modified in the Credit Agreement (below). On July 30, 2021, the Company entered into the Fourth Amended and Restated Note Purchase and Private Shelf Agreement, which reduced the borrowing capacity to $150.0 million

and extended the expiration date to July 30, 2024. On May 15, 2024, the Company entered into Amendment No. 1 to the Fourth Amended and Restated Note Purchase and Private Shelf Agreement 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. On September 26, 2025, the Company issued and sold $50.0 million of fixed rate senior notes due September 26, 2032. These senior notes bear an interest rate of 5.01 percent with interest-only payments due semi-annually. The proceeds from the issuance of the notes were used to pay off existing variable interest rate indebtedness. As of December 31, 2025, the Company has $200.0 million borrowing capacity available under the Prudential Agreement.

Credit Agreement

On May 13, 2021, the Company entered into the Fourth Amended and Restated Credit Agreement (the “Previous Credit Agreement”). The Previous Credit Agreement extended the maturity date of the Company’s previous credit agreement to May 13, 2026, and decreased the commitment amount from $300.0 million to $250.0 million. On May 11, 2022, the Company entered into Amendment No. 1 that increased the commitment amount from $250.0 million to $350.0 million. On May 14, 2025, the Company entered into the Fifth Amended and Restated Credit Agreement (the “Credit Agreement”). The Fifth Amended and Restated Credit Agreement extended the maturity date of the Previous Credit Agreement to May 14, 2030 while keeping the revolving commitment amount unchanged at $350.0 million. The Credit Agreement provides that the Borrowers may request an increase in the aggregate commitments by up to $175.0 million (not to exceed a total commitment of $525.0 million) subject to the conditions contained therein. All of the Company’s present and future material domestic subsidiaries unconditionally guaranty all of the Borrowers’ obligations under and in connection with the Credit Agreement. Additionally, the Company unconditionally guaranties all of the obligations of Franklin Electric B.V. under the Credit Agreement. Under the Credit Agreement, the Borrowers are required to pay certain fees, including a facility fee of 0.100 percent to 0.275 percent (depending on the Company’s leverage ratio) of the aggregate commitment, payable quarterly in arrears. USD loans may be made either at (i) a Secured Overnight Financing Rate (SOFR) Term Benchmark, with a zero percent floor, plus an applicable margin of 0.950 percent to 1.975 percent (depending on the Company's leverage ratio) or (ii) an alternative base rate as defined in the Credit Agreement. EUR loans may be made in Euro Interbank Offer Rate (EURIBOR) Term Benchmark, with a zero percent floor, plus an applicable margin of 0.850 percent to 1.875 percent (depending on the Company’s leverage ratio) or (ii) an alternative base rate as defined in the Credit Agreement.

Project Bonds

On December 31, 2012, the Company, Allen County, Indiana and certain institutional investors entered into a Bond Purchase and Loan Agreement. Under the agreement, Allen County, Indiana issued a series of Project Bonds entitled “Taxable Economic Development Bonds, Series 2012 (Franklin Electric Co., Inc. Project).” The aggregate principal amount of the Project Bonds that were issued, authenticated, and are now outstanding thereunder was limited to $25.0 million. The Company then borrowed the proceeds under the Project Bonds through the issuance of Project Notes to finance the cost of acquisition, construction, installation and equipping of the new Global Corporate Headquarters and Engineering Center. These Project Notes (“Tax increment financing debt”) bear interest at 3.6 percent per annum. Interest and principal balance of the Project Notes are due and payable by the Company directly to the institutional investors in aggregate semi-annual installments commencing on July 10, 2013, and concluding on January 10, 2033. The use of the proceeds from the Project Notes was limited to assist the financing of the new Global Corporate Headquarters and Engineering Center. On May 5, 2015, the Company entered into Amendment No. 1 to the Bond Purchase and Loan Agreement. This amendment provided for debt repayment guarantees from certain Company subsidiaries and waived certain non-financial covenants related to subsidiary guarantees.

As of December 31, 2025, the Company had $30.0 million outstanding borrowings with a weighted-average interest rate of 2.9 percent, $6.4 million in letters of credit outstanding, and $313.6 million of available capacity under the Credit Agreement. As of December 31, 2024, the Company had $41.4 million outstanding borrowings with a weighted average interest rate of 3.7 percent, $4.5 million in letters of credit outstanding, and $304.1 million of available capacity under the Credit Agreement.

The Company also has lines of credit for certain subsidiaries with various expiration dates. The aggregate maximum borrowing capacity of these overdraft lines of credits is $19.7 million. As of December 31, 2025, there were $1.5 million outstanding borrowings and $18.1 million of available capacity under these lines of credit. As of December 31, 2024, there were $16.8 million overdraft lines of credit with no outstanding borrowings and $16.8 million of available capacity under these lines of credit.

Covenants

The Company’s credit agreements contain customary financial covenants. The Company’s most significant agreements and restrictive covenants are in the New York Life Agreement, the Project Bonds, the Prudential Agreement, and the Credit Agreement; each containing both affirmative and negative covenants. The affirmative covenants relate to financial statements, notices of material events, conduct of business, inspection of property, maintenance of insurance, compliance with laws and most favored lender obligations. The negative covenants include limitations on loans, advances and investments, and the

granting of liens by the Company or its subsidiaries, as well as prohibitions on certain consolidations, mergers, sales and transfers of assets. The covenants also include financial requirements including a maximum leverage ratio of 3.50 to 1.00 and a minimum interest coverage ratio of 3.00 to 1.00. Cross default is applicable with the Credit Agreement, the Prudential Agreement, the Project Bonds, and the New York Life Agreement, but only if the Company is defaulting on an obligation exceeding $10.0 million. The Company was in compliance with all financial covenants as of December 31, 2025.

7. 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. Any exposure related to this matter is neither probable nor reasonably estimable at this time. 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 December 31, 2025, the Company had $8.5 million of commitments primarily for capital expenditures and the purchase of raw materials to be used in production.

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 consolidated balance sheets for 2025 and 2024, are as follows:


(In millions)	2025		2024
Beginning balance	$	9.0	$	9.3
Accruals related to product warranties	11.5		12.7

Reductions for payments made	(11.4)		(13.0)
Ending balance	$	9.1	$	9.0

The Company maintains certain warehouses, distribution centers, office space, and equipment operating leases. The Company also has lease agreements that are classified as financing. However, these financing leases are immaterial to the Company.

The components of the Company's operating lease portfolio as of 2025, 2024, and 2023 are as follows:


Lease Cost (In millions):	2025			2024			2023
Operating lease cost	$	22.9		$	22.0		$	18.8
Variable lease cost	$	9.3		$	8.1		$	7.6

Other Information:
Weighted-average remaining lease term	4.4 years			4.2 years			4.0 years
Weighted-average discount rate	5.5		%	5.0		%	4.3		%

The Company has entered into lease agreements with aggregate future minimum payments of approximately $2.0 million that have not yet commenced as of December 31, 2025.

The future minimum rental payments for non-cancellable operating leases as of December 31, 2025, are as follows:


(In millions)	Total		2026		2027		2028		2029		2030		Thereafter
Undiscounted future minimum rental payments	$	77.6	$	24.4	$	17.8	$	13.2	$	8.4	$	5.1	$	8.7
Less: Imputed Interest	10.6
Present value of lease liabilities	$	67.0

8. SHAREHOLDERS' EQUITY

Share-based Compensation

In 2023, the Company amended The Franklin Electric Co., Inc. 2017 Stock Plan, which is called The Franklin Electric Co., Inc. Amended and Restated 2017 Stock Plan ("the 2017 Amended and Restated Stock Plan") and increased the number of shares available under the Plan by 900,000 to 2,300,000. The 2017 Amended and Restated Stock Plan is a stock-based compensation plan that provides for discretionary grants of stock options, stock awards, stock unit awards, and stock appreciation rights (“SARs”) to key employees and non-employee directors. Stock options and SARs reduce the number of available shares by one share for each share subject to the option or SAR, and stock awards and stock unit awards settled in shares reduce the number of available shares by 1.5 shares for every one share delivered.

The Company also maintains the Franklin Electric Co., Inc. 2012 Stock Plan (the “2012 Stock Plan”), which is a share-based compensation plan that provides for discretionary grants of stock options, stock awards and stock unit awards to key employees and non-employee directors.

The 2012 Stock Plan authorized 2,400,000 shares for issuance as follows:


2012 Stock Plan						Authorized Shares
Stock Options						1,680,000
Stock/Stock Unit Awards						720,000

No additional options and awards are granted out of the 2012 Stock Plan. However, there are still unvested awards and unexercised options under this plan.

The Company currently issues new shares from its common stock balance to satisfy option exercises and the settlement of stock awards and stock unit awards made under the outstanding stock plans.

The Company recognizes share-based compensation expense only for the portion of shares that it expects to vest. As such, an estimated forfeiture rate is applied to calculate the share-based compensation expense, which is based on historical forfeiture data. The total share-based compensation expense recognized in 2025, 2024, and 2023 was $13.2 million, $12.1 million, and $10.1 million, respectively. The tax benefit recognized in 2025, 2024, and 2023 was $3.7 million, $5.0 million, and $5.6 million. Included in the benefit in 2025, 2024, and 2023 were excess tax benefits on share-based compensation of $0.6 million, $2.3 million, and $3.2 million, respectively.

Stock Options:

Under the above plans, the exercise price of each option equals the market price of the Company’s common stock on the date of grant, and the options expire 10 years after the date of the grant. Options vest at 33 percent a year and become fully vested and fully exercisable after 3 years. Vesting is accelerated upon retirement, death or disability. Subject to the terms of the plans, in general, the aggregate option exercise price and any applicable tax withholding may be satisfied in cash or its equivalent, by the plan participant’s delivery of shares of the Company’s common stock having a fair market value at the time of exercise equal to the aggregate option exercise price and/or the applicable tax withholding or by having shares otherwise subject to the award withheld by the Company or via cashless exercise through a broker-dealer.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model with a single approach and amortized using a straight-line attribution method over the option’s vesting period. Options granted to retirement eligible employees are immediately expensed. The Company uses historical data to estimate the expected volatility of its stock, the weighted average expected life, the period of time options granted are expected to be outstanding, and its dividend yield. The risk-free rates for periods within the contractual life of the option are based on the U.S. Treasury yield curve in effect at the time of the grant.

The table below provides the weighted average grant-date fair values and key assumptions used for the Black-Scholes model to determine the fair value of options granted during 2025, 2024, and 2023:


	2025			2024			2023
Risk-free interest rate	4.39		%	4.38		%	4.02		%
Dividend yield	1.00		%	1.03		%	0.95		%

Volatility factor	32.50		%	33.01		%	33.81		%

Expected term	6.0 years			6.0 years			6.0 years
Weighted average grant-date fair value of options	$	38.08		$	35.03		$	34.51

A summary of the Company’s outstanding stock option activity and related information is as follows:


(Shares in thousands)	Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (000’s)
Stock Options










Outstanding at beginning of 2025	861	$	66.15
Granted	63	106.00
Exercised	(93)	57.48
Forfeited	(5)	102.01
Expired	(15)	96.71
Outstanding at end of 2025	811	$	69.44	4.60 years	$	21,974
Expected to vest after applying forfeiture rate	808	$	69.32	4.59 years	$	21,972
Vested and exercisable at end of period	695	$	64.18	3.93 years	$	21,927


(In millions)	2025		2024		2023
Intrinsic value of options exercised	$	3.6	$	8.8	$	11.6
Cash received from the exercise of options	5.3		7.2		9.2
Fair value of shares vested	4.2		2.5		3.1
Tax benefit of options exercised	0.6		1.8		2.9

As of December 31, 2025, there was $2.1 million of total unrecognized compensation cost related to non-vested stock options granted under the stock plans. That cost is expected to be recognized over a weighted-average period of 1.63 years.

Stock/Stock Unit Awards:

Under the 2017 Stock Plan, non-employee directors and employees may be granted stock awards and stock units. Stock awards to non-employee directors are generally fully vested when made. Stock/stock unit awards to employees cliff vest over 3 years (subject to accelerated vesting of a pro rata portion in the case of retirement, death or disability) and may be contingent on the attainment of certain performance goals, which are based on specified growth objectives measured relative to an established market benchmark. Dividends are paid to the recipient prior to vesting, except that dividends on performance-based stock awards under the 2012 Stock Plan and the 2017 Stock Plan will be paid only to the extent the performance goals are met.

Stock/stock unit awards granted to retirement eligible employees are expensed over the vesting period. Compensation cost for the performance stock/stock unit awards is accrued based on the probable outcome of specified performance conditions.

A summary of the Company’s restricted stock/stock unit award activity and related information is as follows:


(Shares in thousands)	Shares	Weighted-Average Grant- Date Fair Value
Restricted Stock/Stock Unit Awards




Non-vested at beginning of 2025	314	$	92.83
Awarded	120	101.28
Vested	(98)	84.89
Forfeited	(23)	96.50
Non-vested at end of 2025	313	$	98.28

The weighted-average grant date fair value of restricted stock/stock unit awards granted in 2025, 2024, and 2023, is $101.28, $93.97, and $87.31, respectively. The fair value of restricted stock/stock unit awards that vested in 2025, 2024, and 2023, was $8.3 million, $7.9 million, and $8 million, respectively.

As of December 31, 2025, there was $11.1 million of total unrecognized compensation cost related to non-vested stock/stock unit awards granted under the stock plans. That cost is expected to be recognized over a weighted-average period of 1.22 years.

Authorized Shares

The Company has the authority to issue 65,000,000, $0.10 par value common shares.

The Company also has the authority to issue 100,000 preference shares with no par value and 5,000,000 preferred shares with no par value. No preference or preferred shares have been issued.

Repurchased Shares

During 2025, 2024, and 2023, pursuant to a stock repurchase program authorized by the Company’s Board of Directors, the Company repurchased and retired the following amounts and number of shares:


(In millions, except share amounts)	2025		2024		2023
Repurchases	$	160.0	$	53.1	$	32.5
Shares	1,790,958		549,062		371,452

The Company retired shares in the amount of 54,506, 74,513, and 101,690 in 2025, 2024, and 2023, respectively, that were received from employees as payment for the exercise price of their stock options and taxes owed upon the exercise of their stock options and release of their restricted awards. The Company also reduced outstanding shares in the amount of 16,856, 5,930, and 0 in 2025, 2024, and 2023, respectively, that had been previously granted as stock awards to employees but were forfeited upon not meeting the required restriction criteria or termination.

9. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

Changes in accumulated other comprehensive income/(loss), net of tax, by component are summarized below:


(In millions)	Foreign Currency Translation Adjustments		Pension and Post-Retirement Plan Benefit Adjustments		Total
Balance, December 31, 2022	$	(191.3)	$	(40.1)	$	(231.4)
Other comprehensive income/(loss) before reclassifications(1)	12.0		(3.3)		8.7
Amounts reclassified from accumulated other comprehensive income/(loss) (2)(3)	—		1.6		1.6
Net other comprehensive income/(loss)	12.0		(1.7)		10.3
Balance, December 31, 2023	$	(179.3)	$	(41.8)	$	(221.1)
Other comprehensive income/(loss) before reclassifications(1)	(35.7)		1.1		(34.6)
Amounts reclassified from accumulated other comprehensive income/(loss) (2)(3)	—		1.7		1.7
Net other comprehensive income/(loss)	(35.7)		2.8		(32.9)
Balance, December 31, 2024	$	(215.0)	$	(39.0)	$	(254.0)
Other comprehensive income/(loss) before reclassifications(1)	48.8		5.6		54.4
Amounts reclassified from accumulated other comprehensive income/(loss) (2)(3)	—		0.6		0.6
Pension settlement, net of tax(4)	—		41.5		41.5
Net other comprehensive income/(loss)	48.8		47.7		96.5
Balance, December 31, 2025	$	(166.2)	$	8.7	$	(157.5)

(1) Net of tax (benefit)/expense of $2.0 million, $0.3 million and $(1.1) million for 2025, 2024, and 2022, respectively.

(2) This accumulated other comprehensive income/(loss) component is included in the computation of net periodic pension cost (refer to Note 10 - Employee Benefit Plans for additional details) and is included in the “Other income, net” line of the Company’s consolidated statements of income.

(3) Net of tax expense of $0.2 million, $0.6 million and $0.5 million for 2025, 2024, and 2023, respectively

(4) Net of tax expense of $13.5 million for 2025.

Amounts related to noncontrolling interests were not material.

10. EMPLOYEE BENEFIT PLANS

Defined Benefit Plans - As of December 31, 2025, the Company maintained one domestic pension plan and three German pension plans. The Company used a December 31, 2025 measurement date for these plans. The Company’s remaining domestic pension plan covers two retired participants.

On February 13, 2025, the Company's Board of Directors approved the termination of the domestic Franklin Electric Co, Inc. Pension Plan (the “Plan”). On July 9, 2025, lump sum distributions of $59.9 million were made to eligible participants who elected that payment option to settle the obligation. On July 29, 2025, the Company settled its benefit obligation under the Plan for the remaining participants with the purchase of a nonparticipating, single premium annuity contract from a third-party insurance company, for $28.6 million. In connection with the termination and settlement of the Plan, the Company recognized a non-cash pension settlement gross loss of $55.3 million during the third quarter of 2025 related to the actuarial losses previously accumulated in Accumulated Other Comprehensive Loss, which was included in the “Pension settlement loss” line of the Company’s condensed consolidated statements of income. The Plan was terminated on July 31st, 2025. Excess plan assets were reverted to the Company and will be contributed to the Company's defined contribution plan. The amount that exceeded the annual contribution limit is held in a suspense account until it can be contributed in future periods.

The terminated Plan, the single domestic and three German plans collectively comprise the ‘Pension Benefits’ disclosure caption.

Other Benefits - The Company’s other post-retirement benefit plan provides health and life insurance to domestic employees hired prior to 1992. The Company effectively capped its cost for those benefits through plan amendments made in 1992, freezing Company contributions for insurance benefits at 1991 levels for current and future beneficiaries with actuarially

reduced benefits for employees who retire before age 65. The disclosures surrounding this plan are reflected in the “Other Benefits” caption.

The following table sets forth aggregated information related to the Company’s pension benefits and other postretirement benefits, including changes in the benefit obligations, changes in plan assets, funded status, amounts recognized in the balance sheet, amounts recognized in Accumulated Other Comprehensive Loss, and actuarial assumptions that the Company considered in its determination of benefit obligations and plan costs.


(In millions)	Pension Benefits				Other Benefits
	2025		2024		2025		2024
Accumulated benefit obligation, end of year	$	27.0	$	127.1	$	4.3	$	4.6

Change in projected benefit obligation:
Benefit obligation, beginning of year	$	127.9	$	137.5	$	4.6	$	5.6
Service cost	0.6		0.6		—		—
Interest cost	4.3		6.1		0.2		0.3
Actuarial (gain)/loss	(4.4)		(5.3)		0.1		(0.6)
Settlements paid	—		—		—		—
Benefits paid	(14.6)		(9.8)		(0.6)		(0.7)
Foreign currency exchange	2.4		(1.2)		—		—
Plan settlement	(88.5)		—		—		—
Benefit obligation, end of year	$	27.7	$	127.9	$	4.3	$	4.6

Change in plan assets:
Fair value of assets, beginning of year	$	105.3	$	111.7	$	—	$	—
Actual return on plan assets	7.3		3.1		—		—
Company contributions	(4.9)		0.6		0.6		0.7
Settlements paid	—		—		—		—
Benefits paid	(14.6)		(9.8)		(0.6)		(0.7)
Foreign currency exchange	0.5		(0.3)		—		—
Plan settlement	(88.5)		—		—		—
Plan assets, end of year	$	5.1	$	105.3	$	—	$	—

Funded status	$	(22.6)	$	(22.6)	$	(4.3)	$	(4.6)

Amounts recognized in balance sheet:
Non current assets	$	—	$	7.6	$	—	$	—
Current liabilities	(5.6)		(6.1)		(0.6)		(0.7)
Non current liabilities	(17.0)		(24.1)		(3.7)		(3.9)
Net liability, end of year	$	(22.6)	$	(22.6)	$	(4.3)	$	(4.6)

Amount recognized in accumulated other comprehensive loss:
Prior service cost	$	—	$	—	$	—	$	—
Net actuarial gain (loss)	(33.5)		(39.8)		0.7		0.8
Settlement	—		—		—		—
Pension settlement loss, net of tax	41.5		—		—		—
Total recognized in accumulated other comprehensive loss	$	8.0	$	(39.8)	$	0.7	$	0.8

As of December 31, 2025, the pension benefits' aggregate accumulated benefit obligation and projected benefit obligation for plans that have an accumulated benefit obligation and projected benefit obligation in excess of plan assets was $27.0 million

and $27.7 million, respectively and as of December 31, 2024, was $33.6 million and $34.5 million, respectively. As of December 31, 2025 and December 31, 2024, the aggregate fair value of plan assets related to these plans was $5.1 million and $4.3 million, respectively.

The following table sets forth other changes in plan assets and benefit obligation recognized in other comprehensive income/(loss) for 2025 and 2024:


(In millions)	Pension Benefits				Other Benefits
	2025		2024		2025		2024
Net actuarial (gain)/loss	$	(7.8)	$	(0.9)	$	0.1	$	(0.6)

Amortization of:
Net actuarial loss	(0.9)		(2.3)		0.1		—
Prior service credit	—		—		—		—
Settlement recognition	—		—		—		—
Pension settlement loss	(54.9)		—		—		—
Deferred tax asset	15.7		0.8		(0.1)		0.1
Foreign currency exchange	—		0.1		—		—
Total recognized in other comprehensive income/(loss)	$	(47.9)	$	(2.3)	$	0.1	$	(0.5)

The settlement of the Plan was the largest contributor to the net actuarial losses recorded in 2025. The increased discount rate, partially offset by unfavorable returns on assets were the largest contributors to the net actuarial gains recorded in 2024.

Weighted-average assumptions used to determine domestic benefit obligations:


	Pension Benefits						Other Benefits
	2025			2024			2025		2024
Discount rate	4.07	%		5.48	%		5.04	%	5.47	%
Rate of increase in future compensation	—	%	*	—	%	*	2.00 - 9.00% (Graded)		2.00 - 9.00% (Graded)

*No rate of increases in future compensation were used in the assumptions for 2025 and 2024, as the cash balance component of the domestic Pension Plan was frozen and the other domestic Pension Plan components do not base benefits on compensation. The weighted-average interest crediting rate of the cash balance component of the domestic Pension Plan was 0.0 percent, 4.50 percent, and 4.50 percent for 2025, 2024, and 2023, respectively and is based on the approximate 30-year Treasury rate as of November of the prior year with a minimum of 4.5 percent.

Assumptions used to determine domestic periodic benefit cost:


	Pension Benefits									Other Benefits
	2025			2024			2023			2025		2024		2023
Discount rate	4.07	%		4.95	%		5.14	%		5.47	%	4.88	%	5.08	%
Rate of increase in future compensation	—	%	*	—	%	*	—	%	*	2.00 - 9.00% (Graded)		2.00 - 9.00% (Graded)		2.00 - 9.00% (Graded)
Expected long-term rate of return on plan assets	—	%		6.20	%		5.70	%		—	%	—	%	—	%

*No rate of increases in future compensation were used in the assumptions for 2025, 2024, and 2023, as the cash balance component of the domestic Pension Plan was frozen and the other domestic Pension Plan components do not base benefits on compensation.

For the years ended December 31, 2025 and December 31, 2024, the Company used the PRI-2012 aggregate mortality table, and then projected forward from 2012 using Scale MP-2021 released by the Society of Actuaries during 2021 to estimate future mortality rates based upon current data.

The following table sets forth the aggregated net periodic benefit cost for all defined benefit plans for 2025, 2024, and 2023:


(In millions)	Pension Benefits						Other Benefits
	2025		2024		2023		2025		2024		2023
Service cost	$	0.6	$	0.6	$	0.6	$	—	$	—	$	—
Interest cost	4.3		6.1		6.4		0.2		0.3		0.3
Expected return on assets	(3.9)		(7.5)		(7.2)				—		—
Amortization of:
Transition obligation	—		—		—		—		—		—
Settlement cost	—		—		—		—		—		—
Prior service cost	—		—		—		—		—		—
Actuarial loss	0.9		2.3		2.1		—		—		—
Settlement cost	—		—		—		—		—		—

Pension settlement loss	54.9		—		—		—		—		—
Net periodic benefit cost	$	56.8	$	1.5	$	1.9	$	0.2	$	0.3	$	0.3

The Company consults with a third party investment manager for the assets of the funded domestic defined benefit plan. Before settlement of the Plan, the plan assets were invested primarily in pooled funds, where each fund in turn is composed of mutual funds that have at least daily net asset valuations. Thus, the Company’s funded domestic defined benefit plan assets were invested in a “fund of funds” approach.

The Company’s Board has delegated oversight and guidance to an appointed Employee Benefits Committee. The Committee has the tasks of reviewing plan performance and asset allocation, ensuring plan compliance with applicable laws, establishing plan policies, procedures, and controls, monitoring expenses, and other related activities.

The plan’s investment policies and strategies focused on the ability to fund benefit obligations as they come due. Considerations include the plan’s current funded level, plan design, benefit payment assumptions, funding regulations, impact of potentially volatile business results on the Company’s ability to make certain levels of contributions, and interest rate and asset return volatility among other considerations. Before settlement of the Plan, the Company attempted to maintain plan funded status at approximately 80 percent or greater pursuant to the Pension Protection Act of 2007. Prior to the settlement of the Plan, the Company saw ample liquidity to achieve this goal given the Company’s cash on hand, cash historically generated from business operations, and cash available under committed credit facilities.

Risk management and continuous monitoring requirements were met through monthly investment portfolio reports, quarterly Employee Benefits Committee meetings, annual valuations, asset/liability studies, and the annual assumption process focusing primarily on the return on asset assumption and the discount rate assumption. As of December 31, 2025 and December 31, 2024, funds were invested in equity, fixed income, and other investments as follows:


	Target Percentage		Plan Asset Allocation at Year-End
Asset Category	at Year-End 2025		2025		2024
Equity securities	—	%	—	%	16	%
Fixed income securities	—	%	—	%	79	%
Other	100	%	100	%	5	%
Total	100	%	100	%	100	%

Prior to settlement of the Plan, the Company did not see any particular concentration of risk within the plans, nor any plan assets that posed difficulties for fair value assessment. The Company had no allocation to potentially illiquid or potentially difficult to value assets such as hedge funds, venture capital, private equity, and real estate.

The Company works with actuaries and consultants in making its determination of the asset rate of return assumption and also the discount rate assumption.

Asset class assumptions are set using a combination of empirical and forward-looking analysis for long-term rate of return on plan assets. A variety of models are applied for filtering historical data and isolating the fundamental characteristics of asset classes. These models provide empirical return estimates for each asset class, which are then reviewed and combined with a

qualitative assessment of long-term relationships between asset classes before a return estimate is finalized. This provides an additional means for correcting for the effect of unrealistic or unsustainable short-term valuations or trends, opting instead for return levels and behavior that are more likely to prevail over long periods.

The Company uses the Aon Hewitt AA Above Median curve to determine the discount rate. All cash flow obligations under the plan are matched to bonds in the Aon Hewitt universe of liquid, high-quality, non-callable / non-puttable corporate bonds with outliers removed. From that matching exercise, a discount rate is determined.

The Company’s German pension plans are funded by insurance contract policies whereby the insurance company guarantees a fixed minimum return. Due to tax legislation, individual pension benefits can only be financed using direct insurance policies up to certain maximums. These maximum amounts in respect of each member are paid into such an arrangement on a yearly basis.

The Company designated all equity and most domestic fixed income plan assets as Level 1, as they are mutual funds with prices that are readily available. The U.S. Treasury securities and German plan assets are designated as Level 2 inputs. The fair value of the German plan assets are measured by the reserve that is supervised by the German Federal Financial Supervisory Authority. The U.S. Treasury securities are administered by the United States government.

The fair values of the Company’s pension plan assets for 2025 and 2024 by asset category are as follows:


(In millions)	2025		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)





Other
Insurance contracts	5.1		—		5.1		—
Cash and equivalents	—		—		—		—
Total	$	5.1	$	—	$	5.1	$	—


(In millions)	2024		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity
International equity mutual funds	$	17.2	$	17.2	$	—	$	—
Fixed income
U.S. treasury and government agency securities	11.1		—		11.1		—
Fixed income mutual funds	72.1		72.1		—		—
Other
Insurance contracts	4.3		—		4.3		—
Cash and equivalents	0.6		0.6		—		—
Total	$	105.3	$	89.9	$	15.4	$	—

The Company estimates total contributions to the plans of about $6.2 million in 2026.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in accordance with the following schedule:


(In millions)	Pension Benefits		Other Benefits
2026	$	5.6	$	0.6
2027	$	5.1	$	0.6
2028	$	0.8	$	0.5
2029	$	0.8	$	0.5
2030	$	0.9	$	0.5
Years 2030 through 2034	$	5.2	$	1.9

Defined Contribution Plans - The Company maintained two defined contribution plans during 2025, 2024, and 2023. The Company’s cash contributions are allocated to participant’s accounts based on investment elections.

The following table sets forth Company contributions to the defined contribution plans:


(In millions)	2025		2024		2023
Company contributions to the plans	$	11.8	$	11.4	$	11.5

11. INCOME TAXES

Income before income taxes consisted of the following:


(In millions)	2025		2024		2023
Domestic	$	108.9	$	169.5	$	163.9
Foreign	85.8		62.3		78.3
	$	194.7	$	231.8	$	242.2

The income tax provision/(benefit) consisted of the following:


(In millions)	2025		2024		2023
Current:
Federal	$	22.0	$	42.5	$	27.0
Foreign	25.5		17.3		14.9
State	6.1		10.0		7.2
Total current	53.6		69.8		49.1
Deferred:
Federal	(2.5)		(16.0)		(1.1)
Foreign	(3.8)		(0.8)		(0.3)
State	(1.3)		(2.8)		(0.2)
Total deferred	$	(7.6)	$	(19.6)	$	(1.6)
	$	46.0	$	50.2	$	47.5

The table below provides the updated requirements of ASU 2023-09 for 2025.

A reconciliation of the tax provision for continuing operations at the U.S. statutory rate to the effective income tax expense rate as reported is as follows:


(In millions)	2025(a)
	Amount		Percent
U.S. Federal Statutory Tax Rate	$	40.9	21.0	%
U.S. State and Local Income Taxes, Net of Federal Income Tax Effect (a)	3.4		1.7
Foreign Tax Effects
Netherlands
Exemption of Foreign Business Profits	(7.2)		(3.7)
Pillar Two Global Minimum Tax	2.9		1.5
Other	1.3		0.6
Other foreign jurisdictions	7.3		3.7

Effect of Cross-Border under U.S. Tax Laws
Foreign-derived intangible income	(4.0)		(2.1)
Other	(0.3)		(0.1)


U.S. Nontaxable or Nondeductible Items
Nondeductible officer's compensation	2.5		1.3
Other	0.1		0.1
Other U.S. Adjustments	(0.9)		(0.4)

Effective Tax Rate	$	46.0	23.6	%

(a) The following jurisdictions made up the majority (greater than 50 percent) of the tax effect in this category:

2025 - California, Texas, Florida, Michigan, Pennsylvania, Illinois, and New York;

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the reconciliation of the tax provision for continuing operations at the U.S. statutory rate to the effective income tax expense rate as reported is as follows.


	2024		2023
U.S. Federal statutory rate	21.0	%	21.0	%
State income taxes, net of federal benefit	2.3		2.3
Foreign operations	1.0		(0.7)
R&D tax credits	(0.6)		(0.4)
Uncertain tax position adjustments	0.2		(0.1)

Valuation allowance on state and foreign deferred tax	0.2		(0.2)

Share-based compensation	(0.8)		(1.0)

Other items	0.9		(0.1)


Foreign Derived Intangible Income	(3.5)		(2.4)
Nondeductible officer's compensation	1.0		1.2
Effective tax rate	21.7	%	19.6	%

The effective tax rate differs from the U.S. statutory rate of 21 percent primarily due to U.S. state taxes, foreign earnings taxed at rates higher than the U.S. statutory rate, U.S. state taxes, Pillar Two Global Minimum Tax, and nondeductible officer’s compensation, which were partially offset by an object exemption of foreign business profits in the Netherlands, the recognition of the U.S. foreign-derived intangible income (FDII) provisions, certain incentives, and discrete events.

Significant components of the Company’s deferred tax assets and liabilities were as follows:


(In millions)	2025		2024
Deferred tax assets:
Accrued expenses and reserves	$	16.7	$	15.5
Compensation and employee benefits	11.9		16.0
Intercompany prepayments (FDII related)	14.9		16.9
Net operating losses, tax credit carryforwards, and other	10.3		11.8
Lease liability	16.8		15.7
Research and development expenditures, net	4.5		7.4
Valuation allowance on state and foreign deferred tax	(4.4)		(4.4)

Total deferred tax assets	70.7		78.9
Deferred tax liabilities:
Accelerated depreciation on fixed assets	17.3		15.6
Amortization of intangibles	68.7		49.2
Lease right-of-use asset, net	16.8		15.7
Other items	0.6		0.4
Total deferred tax liabilities	103.4		80.9
Net deferred tax liabilities	$	(32.7)	$	(2.0)

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss for certain foreign income tax purposes incurred over the 3-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as the Company's projections for future growth.

On the basis of this evaluation, as of December 31, 2025, a valuation allowance of $4.4 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The Company has foreign income tax net operating loss (“NOL”) and credit carryforwards of $6.5 million and U.S. state income tax credit carryforwards of $3.8 million, which will expire on various dates as follows:


(In millions)
2026-2029	$	3.2
2030-2034	1.6
2035-2039	0.6
2040-2045	0.3
Unlimited	4.6
	$	10.3

The Company believes that it is more likely than not that the benefit from certain foreign NOL carryforwards as well as certain U.S. state credit carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $3.2 million on the deferred tax assets related to these foreign NOL carryforwards and a valuation allowance of $1.2 million on the deferred tax assets related to these U.S. state credit carryforwards.

As of December 31, 2025, the Company has estimated accumulated undistributed earnings generated by the Company's foreign subsidiaries of approximately $656.4 million. Any taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of its foreign investments would generally be limited to foreign and U.S. state taxes. The Company intends, however, to indefinitely reinvest these earnings and expects future U.S. cash generation to be sufficient to meet future U.S. cash needs. The Company, therefore, has not recorded a deferred tax liability of approximately $7.5 million.

As of the beginning of 2025, the Company had gross unrecognized tax benefits of $1.3 million, excluding accrued interest and penalties. The unrecognized tax benefits increased due to uncertain tax positions identified for the current and prior years based on evaluations made during 2025, which were offset by statute expirations. The Company had gross unrecognized tax benefits, excluding accrued interest and penalties, of $3.0 million as of December 31, 2025.

During the first quarter of 2025, the Company recorded additional unrecognized tax benefits (excluding accrued interest and penalties) of $1.5 million. This amount is associated with uncertain tax positions taken by newly acquired companies in tax years prior to the acquisition of these companies. The stock purchase agreement related to the acquisition provides the Company the right to recover tax liabilities related to pre-acquisition tax years from the sellers and has accordingly recognized an indemnification receivable.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for 2025, 2024, and 2023 (excluding interest and penalties) is as follows:


(In millions)	2025		2024		2023
Beginning balance	$	1.3	$	0.8	$	0.9
Additions for tax positions of the current year	0.3		0.6		0.3
Additions for tax positions of prior years	1.5		0.2		—

Statute expirations	(0.1)		(0.3)		(0.4)

Ending balance	$	3.0	$	1.3	$	0.8

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company has accrued interest and penalties as of December 31, 2025, December 31, 2024, and December 31, 2023 of approximately $1.1 million, $0.1 million, and $0.1 million, respectively.

The Company is subject to taxation in the United States and various U.S. state and foreign jurisdictions. With few exceptions, as of December 31, 2025, the Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2022 and is no longer subject to foreign or U.S. state income tax examinations by tax authorities for years before 2020.

Total cash paid for income taxes, net of refunds are as follows:


(In millions)	2025
Federal	$	43.8
State	9.2
Foreign	23.7
Total	$	76.7

Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions:


(In millions)	2025
Federal
United States	$	43.8
Foreign
Brazil	$	4.7

12. 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:


(In millions, except per share amounts)	2025		2024		2023
Numerator:
Net income attributable to Franklin Electric Co., Inc.	$	147.1	$	180.3	$	193.3
Less: Earnings allocated to participating securities	0.6		0.7		0.7
Net income available to common shareholders	$	146.5	$	179.6	$	192.6
Denominator:
Basic weighted average common shares outstanding	45.0		45.9		46.2
Effect of dilutive securities:
Non-participating employee stock options, performance awards, and deferred shares to non-employee directors	0.5		0.6		0.7
Diluted weighted average common shares outstanding	45.5		46.5		46.9
Basic earnings per share	$	3.25	$	3.92	$	4.17
Diluted earnings per share	$	3.22	$	3.86	$	4.11

There were 0.2 million, 0.1 million, and 0.1 million stock options outstanding as of 2025, 2024, and 2023, respectively, that were excluded from the computation of diluted earnings per share, as their inclusion would be anti-dilutive.

13. 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 these 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 December 31, 2025 and December 31, 2024, the swap had a notional value based on 150,000 shares and 250,000 shares, respectively. For the years ended December 31, 2025, December 31, 2024, and December 31, 2023, the swap resulted in a loss of $2.3 million, a loss of $1.3 million, and a gain of $2.5 million, respectively. Gains and losses resulting from the swap were primarily offset by gains and losses on the fair value of the deferred compensation stock liability. All gains or losses and expenses related to the deferred compensation stock liability and the swap are recorded in the Company’s 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 December 31, 2025 and December 31, 2024, the Company had no foreign currency contracts outstanding. For the years ended December 31, 2025, December 31, 2024, and December 31, 2023, the forward currency contracts resulted in a gain of $11.0 million, a loss of $0.2 million, and a gain of $1.6 million, respectively. This is recorded in the Company's consolidated statements of income within the "Foreign exchange expense, net" line.

14. FAIR VALUE MEASUREMENTS

As of December 31, 2025 and December 31, 2024, the assets and liabilities measured at fair value on a recurring basis were as set forth in the table below:

(In millions)

December 31, 2025

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

FRANKLIN ELECTRIC CO INC 10-K