Franklin Electric(US:FELE)2026-02-20 19:33Financial Performance - Net sales for 2025 were $2.1 billion, representing a 5% increase compared to 2024, driven by acquisitions, price realization, and higher volumes[85] - Gross profit for 2025 was $755.9 million, maintaining a gross profit margin of 35.5% consistent with 2024[94] - Diluted earnings per share for 2025 was $3.22, a decrease of $0.64 from the prior year, impacted by a pension settlement charge of $41.5 million net of tax[85] - Operating income increased by 10% to $268.9 million in 2025, with significant contributions from the Distribution segment, which saw a $15.5 million increase[98] - The Company reported a net income of $148.7 million for 2025, compared to $181.6 million in 2024, reflecting the impact of the pension settlement[110] Cash Flow and Investments - Cash flows from operating activities were $238.9 million in 2025, down from $261.4 million in 2024, primarily due to changes in working capital[117] - Cash used in investing activities was $157.1 million in 2025, significantly higher than $45.6 million in 2024, mainly due to increased acquisition activity[118] - Net cash used by financing activities increased to $197.3 million in 2025 from $74.1 million in 2024, primarily due to increased stock repurchases[119] Expenses and Obligations - SG&A expenses increased to $486.2 million in 2025, with a ratio of 22.8% of net sales, down from 23.3% in 2024[96] - The Company has total contractual obligations of $302.7 million, with $167.1 million related to debt obligations due in 2026[120] - Estimated future pension and post-retirement benefit payments are approximately $6.2 million in 2026, excluding a non-current liability of $17.0 million for pension plans[121] Market Risks and Currency - The Company experienced a foreign currency transaction expense of $9.3 million in 2025, primarily due to losses associated with the Argentine Peso and Turkish Lira[108] - The Company actively monitors market risks associated with foreign currency exchange rates, interest rates, and commodity prices[138] - A hypothetical strengthening of the US Dollar by about 2% would have reduced 2025 sales by less than 1%[139] - A 10% adverse movement in prices for raw metal commodities would result in less than a 1% decrease in gross margin as a percentage of net sales[141] Pension and Tax Liabilities - Unrecognized tax benefits amount to approximately $3.0 million, with an additional liability for potential penalties and interest of $1.1 million[122] - The weighted-average discount rate for domestic pension plans decreased from 5.48% to 4.07% year-over-year, impacting liabilities[135] - A hypothetical 100 basis points increase in interest rates would have increased interest expense by $1.2 million during 2025, with $30.0 million in borrowings under the Credit Agreement[140] Acquisitions and Goodwill - The Company acquired Barnes de Colombia S.A. and PumpEng Pty Ltd in Q1 2025, contributing $48.9 million in incremental net sales[83] - The Company completed its annual impairment tests of goodwill and indefinite-lived trade names, determining that fair values were substantially in excess of carrying values[131]