Franklin Electric Stock

Franklin Electric Co., Inc. (Franklin Electric) designs, manufactures and distributes water and fuel pumping systems, primarily consisting 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.

Acquisitions

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.

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.

Markets and Applications

The company’s business consists of three reportable segments based on the principal end market served: Water Systems, Fueling Systems, and Distribution.

The company’s Water Systems and Fueling 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

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 the last three years, the company acquired substantially all of the assets of Action Manufacturing & Supply, Inc. and all of the ownership interest of Puronics, Inc.; New Aqua, LLC; and B&R Industries, Inc. expanding its portfolio to include water treatment systems and acquired Minetuff Dewatering Pumps Australia Pty Ltd expanding its industrial dewatering product line.

Water Systems contributed about 60 percent of the company’s total revenue in 2023. 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. 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’s principal competitors in the specialty water products industry are Grundfos Management A/S, Pentair, Inc. and Xylem, Inc.

2023 Water Systems research and development expenditures were primarily related to the following activities:

Electronic variable frequency drives and controls for Pump and HVAC applications, including enhancements to include IOT capability for the company’s drive and protection products and making the company’s key platforms solar pumping capable.

Development of integrated electronic pressure boosting systems for residential and commercial applications.

Development of new standard electric skid pump package designs including the new ‘SmartPrime’ variable frequency drive skid packages for mining and municipal dewatering markets.

Greywater pumping equipment, including the development of 60Hz electrical submersible pumps from the acquisition of Minetuff and expansion of Non-Clog and grinder pumps for the Americas market.

Submersible pumps for commercial, municipal, and agricultural applications including the development of a new cast stainless submersible turbine line, and upgrading the performance of the line shaft turbine product offering.

Water treatment products focused on component performance improvements and IOT enabled sensing systems.

Fueling Systems

Fueling Systems is a global leader in the production and marketing of fuel pumping systems, fuel containment systems and monitoring and control systems. The Fueling 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 fueling system applications.

Fueling 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 Fueling Systems segment growth has been sustained by a commitment to protecting human health and the environment while delivering the lowest total cost of ownership. Fueling 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.

The company’s principal competitors in the petroleum equipment industry are Vontier Corporation and Dover Corporation.

2023 Fueling Systems research and development expenditures were primarily related to the following activities:

Developed and launched On-Prem, server software to collect data from battery monitoring, battery testers, and distribution monitoring, tailored to the U.S. railroad market.

Developed OM3 TripCoil transformer monitoring instrument.

Developed and launched EVO-Edge, a carwash fluids monitoring system.

Developed and launched Hybrid Battery Control Unit (HBCU), with wireless (WiFi) connectivity.

Developed CVM fuel dispensing and monitoring control system.

Developed EV-Controls NexPhase 600 & 800, electric vehicle charger switchgear.

Distribution

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. Highlights of the Distribution Segment geographic growth through acquisitions in the last three years are as follows:

2021 - Acquired Blake Group Holdings, Inc., a professional groundwater distributor operating in the northeast.

2023 - Acquired substantially all of the assets of LCA Pump, LLC, which operates Water Works Pump, a professional groundwater distributor operating in the Midwest.

Research and Development

The company incurred expenses of approximately $17.7 million in 2023 related to research and development.

Seasonality

The company’s sales in the first quarter (year ended December 2023) 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.

History

Franklin Electric Co., Inc., an Indiana corporation, was founded in 1944. The company was incorporated in 1946.