10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________

FORM 10-Q

_________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐ 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)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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)

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. ☐

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

Yes	☐	No	☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

	Outstanding at
Class of Common Stock Par Value	July 29, 2022
$0.10	46,291,718 shares

FRANKLIN ELECTRIC CO., INC.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	Number
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
	Condensed Consolidated Statements of Income for theSecondQuartersand SixMonthsEndedJune30, 2022 and 2021 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income/(Loss) for theSecondQuartersand Six MonthEndedJune 30, 2022 and 2021 (Unaudited)	5
	Condensed Consolidated Balance Sheets as ofJune 30, 2022 and December 31, 2021 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for theSixMonths EndedJune30, 2022 and 2021 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 6.	Exhibits	35
Signatures		36

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Second Quarter Ended				Six Months Ended
(In thousands, except per share amounts)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net sales	$	551,138	$	437,280	$	1,002,608	$	770,326
Cost of sales	361,850		285,041		667,986		502,541
Gross profit	189,288		152,239		334,622		267,785
Selling, general, and administrative expenses	108,313		100,485		212,986		182,088
Restructuring (income)/expense	(7)		153		713		305
Operating income	80,982		51,601		120,923		85,392
Interest expense	(2,932)		(1,366)		(4,426)		(2,456)
Other income/(expense), net	(1,159)		(430)		(1,537)		(530)
Foreign exchange income/(expense)	(329)		(1,189)		(914)		(1,246)
Income before income taxes	76,562		48,616		114,046		81,160
Income tax expense	16,799		9,253		24,164		13,634
Net income	$	59,763	$	39,363	$	89,882	$	67,526
Less: Net (income)/loss attributable to noncontrolling interests	(399)		(222)		(753)		(505)
Net income attributable to Franklin Electric Co., Inc.	$	59,364	$	39,141	$	89,129	$	67,021
Earnings per share:
Basic	$	1.27	$	0.84	$	1.91	$	1.44
Diluted	$	1.26	$	0.83	$	1.89	$	1.42

See Notes to Condensed Consolidated Financial Statements.

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Unaudited)

	Second Quarter Ended				Six Months Ended
(In thousands)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Net income	$	59,763	$	39,363	$	89,882	$	67,526
Other comprehensive income/(loss), before tax:
Foreign currency translation adjustments	(19,505)		8,135		(10,913)		(3,379)
Employee benefit plan activity	1,184		1,117		2,376		2,233
Other comprehensive income/(loss)	(18,321)		9,252		(8,537)		(1,146)
Income tax expense related to items of other comprehensive income/(loss)	(260)		(232)		(520)		(464)
Other comprehensive income/(loss), net of tax	(18,581)		9,020		(9,057)		(1,610)
Comprehensive income	41,182		48,383		80,825		65,916
Less: Comprehensive income/(loss) attributable to noncontrolling interests	312		243		628		461
Comprehensive income attributable to Franklin Electric Co., Inc.	$	40,870	$	48,140	$	80,197	$	65,455

See Notes to Condensed Consolidated Financial Statements.

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	33,225	$	40,536
Receivables, less allowances of $4,218 and $3,975, respectively	278,924		196,173
Inventories:
Raw material	208,451		166,918
Work-in-process	31,255		24,725
Finished goods	327,437		258,332
Total inventories	567,143		449,975
Other current assets	33,891		37,963
Total current assets	913,183		724,647
Property, plant, and equipment, at cost:
Land and buildings	155,539		154,544
Machinery and equipment	291,137		296,078
Furniture and fixtures	46,748		44,324
Other	47,790		40,231
Property, plant, and equipment, gross	541,214		535,177
Less: Allowance for depreciation	(330,575)		(324,523)
Property, plant, and equipment, net	210,639		210,654
Right-of-use asset, net	47,683		48,379
Deferred income taxes	7,373		7,675
Intangible assets, net	239,939		249,691
Goodwill	327,100		329,630
Other assets	5,623		4,489
Total assets	$	1,751,540	$	1,575,165
	June 30, 2022		December 31, 2021
---	---	---	---	---
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	195,614	$	164,758
Accrued expenses and other current liabilities	102,804		115,408
Current lease liability	15,313		15,320
Income taxes	2,742		2,547
Current maturities of long-term debt and short-term borrowings	223,054		97,981
Total current liabilities	539,527		396,014
Long-term debt	89,846		90,535
Long-term lease liability	32,240		32,937
Income taxes payable non-current	8,707		11,610
Deferred income taxes	30,139		28,162
Employee benefit plans	38,817		40,696
Other long-term liabilities	23,407		26,568
Commitments and contingencies (see Note 15)	—		—
Redeemable noncontrolling interest	284		(19)
Shareholders' equity:
Common stock (65,000 shares authorized, $.10 par value) outstanding (46,277 and 46,483, respectively)	4,628		4,648
Additional capital	318,837		310,617
Retained earnings	900,135		859,817
Accumulated other comprehensive loss	(237,513)		(228,581)
Total shareholders' equity	986,087		946,501
Noncontrolling interest	2,486		2,161
Total equity	988,573		948,662
Total liabilities and equity	$	1,751,540	$	1,575,165

See Notes to Condensed Consolidated Financial Statements.

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
(In thousands)	June 30, 2022		June 30, 2021
Cash flows from operating activities:
Net income	$	89,882	$	67,526
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	24,521		20,535
Non-cash lease expense	8,526		6,471
Share-based compensation	6,322		6,573
Deferred income taxes	2,004		376
(Gain)/Loss on disposals of plant and equipment	721		131
Foreign exchange (income)/expense	914		1,246
Changes in assets and liabilities, net of acquisitions:
Receivables	(93,063)		(62,860)
Inventory	(123,817)		(41,848)
Accounts payable and accrued expenses	29,969		50,262
Operating leases	(8,526)		(6,471)
Income taxes	(1,891)		(4,362)
Income taxes-U.S. Tax Cuts and Jobs Act	(355)		(355)
Employee benefit plans	826		(160)
Other, net	1,426		(1,534)
Net cash flows from operating activities	(62,541)		35,530
Cash flows from investing activities:
Additions to property, plant, and equipment	(20,084)		(12,777)
Proceeds from sale of property, plant, and equipment	6		8
Cash paid for acquisitions, net of cash acquired	(1,365)		(180,917)
Other, net	(8)		27
Net cash flows from investing activities	(21,451)		(193,659)
Cash flows from financing activities:
Proceeds from issuance of debt	341,810		150,343
Repayment of debt	(215,538)		(21,079)
Proceeds from issuance of common stock	1,916		8,989
Purchases of common stock	(30,644)		(11,231)
Dividends paid	(18,205)		(16,320)
Net cash flows from financing activities	79,339		110,702
Effect of exchange rate changes on cash	(2,658)		(1,763)
Net change in cash and equivalents	(7,311)		(49,190)
Cash and equivalents at beginning of period	40,536		130,787
Cash and equivalents at end of period	$	33,225	$	81,597
	Six Months Ended
---	---	---	---	---
(In thousands)	June 30, 2022		June 30, 2021
Cash paid for income taxes, net of refunds	$	24,739	$	17,496
Cash paid for interest	$	4,235	$	2,505
Non-cash items:
Additions to property, plant, and equipment, not yet paid	$	571	$	492
Right-of-Use Assets obtained in exchange for new operating lease liabilities	$	8,359	$	5,515
Payable to sellers of acquired entities	$	—	$	600

See Notes to Condensed Consolidated Financial Statements.

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

		Page Number
Note 1.	Condensed Consolidated Financial Statements	11
Note 2.	Accounting Pronouncements	11
Note 3.	Acquisitions	11
Note 4.	Fair Value Measurements	13
Note 5.	Financial Instruments	13
Note 6.	Goodwill and Other Intangible Assets	14
Note 7.	Employee Benefit Plans	15
Note 8.	Accrued Expenses and Other Current Liabilities	16
Note 9.	Income Taxes	16
Note 10.	Debt	16
Note 11.	Earnings Per Share	18
Note 12.	Equity Roll Forward	19
Note 13.	Accumulated Other Comprehensive Income/(Loss)	21
Note 14.	Segment and Geographic Information	21
Note 15.	Commitments and Contingencies	23
Note 16.	Share-Based Compensation	24

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying condensed consolidated balance sheet as of December 31, 2021, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements as of June 30, 2022, and for the second quarters and six months ended June 30, 2022 and June 30, 2021 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all accounting entries and adjustments (including normal, recurring adjustments) considered necessary for a fair presentation of the financial position and the results of operations for the interim periods have been made. Operating results for the second quarter and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. For further information, including a description of the critical accounting policies of Franklin Electric Co., Inc. (the "Company"), refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

In the second quarter of 2022, the Company concluded that Turkey represents a highly inflationary economy as its projected three-year cumulative inflation rate exceeds 100%. As a result, the Company started remeasuring the financial statements for the Company’s Turkish operations in accordance with the highly inflationary accounting rules in ASC 830, Foreign Currency Matters, as of April 1, 2022. 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 would be reflected in earnings rather than as a component of the Company’s comprehensive income within stockholders’ equity. As of June 30, 2022, this impact was not significant to the Company’s results.

2. ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for various convertible instruments and reduces form-over-substance-based accounting conclusions for the derivatives scope exception for contracts in an entity’s own equity. The FASB also updated Earnings Per Share (“EPS”) guidance under Topic 260 by requiring an entity to consider the potential effect of share settlement in the diluted EPS calculation for instruments that may be settled in cash or shares as well as other amendments. ASU 2020-06 is effective for interim and annual periods beginning after December 15, 2021 with early adoption permitted but no earlier than fiscal years beginning after December 15, 2020. The guidance should be adopted at the beginning of a fiscal year. ASU 2020-06 should be applied on either a retrospective or modified retrospective basis. The Company adopted the standard effective January 1, 2022 using the modified retrospective approach, and it did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

Accounting Standards Issued But Not Yet Adopted

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires entities to recognize and measure contracts on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. This will improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. ASU 2021-08 is effective for interim and annual periods beginning after December 15, 2022 with early adoption permitted. ASU 2021-08 should be applied on a prospective basis to business combinations that occur after the effective date. The Company plans to adopt this ASU on January 1, 2023 and does not anticipate the adoption to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

3. ACQUISITIONS

During the fourth quarter ended December 31, 2021, the Company acquired 100 percent of the ownership interests of B&R Industries, Inc. ("B&R"), a water treatment equipment provider located in Mesa, Arizona, for a cash purchase price of $16.3 million after purchase price adjustments based on the level of working capital acquired. B&R will be included as part of the Water Systems segment of the Company. The Company also acquired, in a separate transaction, 100 percent of the ownership interests of Blake Group Holdings, Inc. ("Blake"), a professional groundwater distributor operating in the northeast United States for a cash purchase price of $28.5 million after purchase price adjustments based on the level of working capital acquired. Blake will be included as part of the Distribution segment of the Company. The fair value of the assets acquired and liabilities assumed for both acquisitions is preliminary as of June 30, 2022.

During the third quarter ended September 30, 2021, the Company acquired 100 percent of the ownership interests of Minetuff Dewatering Pumps Australia Pty Ltd for a cash purchase price of $13.7 million after purchase price adjustments based on the level of working capital acquired. Minetuff manufactures and sells submersible pumps, spare parts, and accessories to the mining industry and will expand the Company’s existing product offerings and channel access in the Water Systems segment. The fair value of the assets acquired and liabilities assumed for the acquisition is preliminary as of June 30, 2022.

During the second quarter ended June 30, 2021, the Company acquired, in separate transactions, 100 percent of the ownership interests of Puronics, Inc. and its wholly owned subsidiaries, headquartered in Livermore, California, and 100 percent of the ownership interests of New Aqua, LLC and its wholly owned subsidiaries, headquartered in Indianapolis, Indiana. Both Puronics and New Aqua are water treatment equipment providers and will be included as a part of the Water Systems segment of the Company. In a separate transaction during the second quarter ended June 30, 2021, the Company acquired all of the assets of Power Integrity Services, LLC, a North Carolina-based company, which will be included in the Fueling Systems segment of the Company.

In another separate transaction during the second quarter ended June 30, 2021, the Company acquired all of the assets of Atlantic Turbine Pump, LLC, a Georgia-based company, which will be included in the Distribution segment of the Company. The Company recorded estimated fair values that exceed the acquisition price by $0.4 million, representing a bargain purchase gain due to favorable market conditions within the "Other income/(expense), net" line in the consolidated statements of income for the year ended December 31, 2021.

The final combined, all-cash purchase price for all acquisitions in the second quarter was $185.5 million after purchase price adjustments based on the level of working capital acquired. The fair value of the assets acquired and liabilities assumed were considered final as of June 30, 2022.

The identifiable intangible assets recognized in the separate transactions in 2021 were $131.5 million and consist primarily of customer relationships and trade names from New Aqua of $93.2 million, which will be amortized using the straight-line method over 12 - 20 years.

The goodwill of $66.2 million resulting from the acquisitions in 2021 consists primarily of expanded geographical presence and product channel expansion. Goodwill deductible for tax purposes is $62.3 million from the acquisitions in 2021. Goodwill was recorded in the Water Systems and Fueling Systems segments.

The preliminary purchase price assigned to the major identifiable assets and liabilities for all acquisitions in 2021 on an aggregated basis is as follows:

(In millions)
Assets:
Inventory	$	34.4
Intangible assets	131.5
Goodwill	66.2
Other assets	39.1
Total assets	271.2
Liabilities	26.8
Less: Bargain purchase gain	0.4
Total consideration paid	$	244.0

The Company has not presented separate results of operations since closing or combined pro forma financial information of the Company and the acquired interest since the beginning of 2021, as the results of operations for all acquisitions is immaterial.

Transaction costs were expensed as incurred under the guidance of FASB Accounting Standards Codification Topic 805, Business Combinations. There were $0.0 million and $0.2 million of transaction costs included in the "Selling, general, and administrative expenses" line of the Company's condensed consolidated statements of income for the second quarter and six months ended June 30, 2022, respectively. There were $0.8 million and $0.9 million of transaction costs included in the "Selling, general, and administrative expenses" line of the Company's condensed consolidated statements of income for the second quarter and six months ended June 30, 2021, respectively.

4. FAIR VALUE MEASUREMENTS

FASB ASC Topic 820, Fair Value Measurements and Disclosures, provides guidance for defining, measuring, and disclosing fair value within an established framework and hierarchy. 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.

As of June 30, 2022 and December 31, 2021, the assets and liabilities measured at fair value on a recurring basis were as set forth in the table below:

(In millions)	June 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs<br>(Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	6.2	$	6.2	$	—	$	—
Forward currency contracts assets	0.1		—		0.1		—
Total assets	$	6.3	$	6.2	$	0.1	$	—
Liabilities:
Share swap transaction	$	0.6	$	0.6	$	—	$	—
Total liabilities	$	0.6	$	0.6	$	—	$	—
	December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	5.3	$	5.3	$	—	$	—
Share swap transaction	0.6		0.6		—		—
Total assets	$	5.9	$	5.9	$	—	$	—

The Company’s Level 1 cash equivalents assets are generally comprised of foreign bank guaranteed certificates of deposit and short term deposits. The share swap transaction and forward currency contracts assets and liabilities are recorded within the "Receivables" and "Accounts Payable" lines of the condensed consolidated balance sheets and are further described in Note 5 - Financial Instruments.

The Company has no assets or liabilities measured on a recurring basis classified as Level 3.

Total debt, including current maturities, have carrying amounts of $312.9 million and $188.5 million and estimated fair values of $311.9 million and $196.1 million as of June 30, 2022 and December 31, 2021, respectively. In the absence of quoted prices in active markets, considerable judgment is required in developing estimates of fair value. Estimates are not necessarily indicative of the amounts the Company could realize in a current market transaction. In determining the fair value of its debt, the Company uses estimates based on rates currently available to the Company for debt with similar terms and remaining maturities. Accordingly, the fair value of debt is classified as Level 2 within the valuation hierarchy.

5. 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 the 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 June 30, 2022, the swap had a notional value based on 225,000 shares. For the second quarter and six months ended June 30, 2022, the swap resulted in a loss of $2.1 million and a loss of $4.6 million, respectively. For the second quarters and six months ended June 30, 2021, the swap resulted in a gain of $0.6 million and a gain of $3.3 million, respectively. Gains and losses resulting from the swap were largely offset by gains and losses on the fair value of the deferred compensation stock liability. All gains or losses and expenses related to the swap are recorded in the Company's condensed 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. For the second quarter and six months ended June 30, 2022, the forward currency contracts resulted in a gain of $0.5 million and a gain of $0.3 million, respectively. This is recorded in the Company's condensed consolidated statements of income within the "Foreign exchange income/(expense)" line.

6. GOODWILL AND OTHER INTANGIBLE ASSETS

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

(In millions)	June 30, 2022				December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizing intangibles:
Customer relationships	253.0		(95.0)		255.1		(88.8)
Patents	$	7.3	$	(7.3)	$	7.3	$	(7.3)
Technology	7.5		(7.4)		7.5		(7.3)
Trade names	41.9		(2.6)		$	42.1	(1.5)
Other	2.7		(2.6)		2.8		(2.7)
Total	$	312.4	$	(114.9)	$	314.8	$	(107.6)
Unamortizing intangibles:
Trade names	42.4		—		42.5		—
Total intangibles	$	354.8	$	(114.9)	$	357.3	$	(107.6)

Amortization expense related to intangible assets for the second quarters ended June 30, 2022 and June 30, 2021 was $4.4 million and $3.5 million, respectively, and for the six months ended June 30, 2022 and June 30, 2021, $8.7 million and $6.0 million, respectively.

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

(In millions)	2022		2023		2024		2025		2026
	$	16.9	$	16.8	$	16.7	$	15.8	$	14.9

The change in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2022, is as follows:

(In millions)
	Water Systems		Fueling Systems		Distribution		Consolidated
Balance as of December 31, 2021	$	213.9	$	70.7	$	45.0	$	329.6
Acquisitions	—		—		—		—
Adjustments to prior year acquisitions	0.9		—		(0.6)		0.3
Foreign currency translation	(2.5)		(0.3)		—		(2.8)
Balance as of June 30, 2022	$	212.3	$	70.4	$	44.4	$	327.1

7. EMPLOYEE BENEFIT PLANS

Defined Benefit Plans - As of June 30, 2022, the Company maintained two domestic pension plans and three German pension plans. The Company used a December 31, 2021 measurement date for these plans. One of the Company's domestic pension plans covers one active management employee, while the other domestic plan covers all eligible employees. Both domestic plans were frozen as of December 31, 2011. The two 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 following table sets forth the aggregated net periodic benefit cost for all pension plans for the second quarters and six months ended June 30, 2022 and June 30, 2021:

(In millions)	Pension Benefits
	Second Quarter Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Service cost	$	0.2	$	0.2	$	0.4	$	0.4
Interest cost	0.8		0.7		1.6		1.4
Expected return on assets	(1.5)		(1.4)		(3.0)		(2.8)
Amortization of:
Prior service cost	—		—		—		—
Actuarial loss	1.2		1.1		2.4		2.1
Settlement cost	—		—		—		—
Net periodic benefit cost	$	0.7	$	0.6	$	1.4	$	1.1

In the six months ended June 30, 2022, the Company made contributions of $0.1 million to the funded plans. The amount of contributions to be made to the plans during the calendar year 2022 will be finalized by September 15, 2022, based upon the funding level requirements identified and year-end valuation performed at December 31, 2021.

The following table sets forth the aggregated net periodic benefit cost for the other post-retirement benefit plan for the second quarters and six months ended June 30, 2022 and June 30, 2021:

(In millions)	Other Benefits
	Second Quarter Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Service cost	$	—	$	—	$	—	$	—
Interest cost	—		0.1		0.1		0.1
Expected return on assets	—		—		—		—
Amortization of:
Prior service cost	—		—		—		—
Actuarial loss	—				—		0.1
Settlement cost	—		—		—		—
Net periodic benefit cost	$	—	$	0.1	$	0.1	$	0.2

8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of:

(In millions)	June 30, 2022	December 31, 2021
Salaries, wages, and commissions	46.6	62.3
Product warranty costs	11.0	10.5
Insurance	2.1	2.3
Employee benefits	8.5	11.9
Other	34.6	28.4
Total	102.8	115.4

9. INCOME TAXES

The Company’s effective tax rate from continuing operations for the six month period ended June 30, 2022 was 21.2 percent as compared to 16.8 percent for the six month period ended June 30, 2021. The effective tax rate is higher than the U.S. statutory rate of 21 percent primarily due to state taxes offset by the recognition of the U.S. foreign-derived intangible income (FDII) provisions. For the second quarter of 2022, the effective tax rate was 21.9 percent compared to19.0 percent for the second quarter of 2021.

The increase in the effective tax rate for the second quarter of 2022 as well as the six month period ended June 30, 2022 was primarily a result of less favorable discrete events recorded in the six month period ended June 30, 2022, as compared to the six month period ended June 30, 2021, primarily related to excess tax benefits from share based compensation.

10. DEBT

Debt consisted of the following:

(In millions)	June 30, 2022		December 31, 2021
New York Life Agreement	75.0		75.0
Credit Agreement	217.7		96.6
Tax increment financing debt	15.9		16.5
Foreign subsidiary debt	4.5		0.5
Other	—		0.1
Less: unamortized debt issuance costs	(0.2)		(0.2)
	$	312.9	$	188.5
Less: current maturities	(223.1)		(98.0)
Long-term debt	$	89.8	90.5

Debt outstanding, excluding unamortized debt issuance costs, at June 30, 2022 matures as follows:

(In millions)	Total		Year 1		Year 2		Year 3		Year 4		Year 5		More Than 5 Years
Debt	$	313.1	$	223.1	$	1.3	$	1.4	$	76.4	$	1.5	$	9.4

Prudential Agreement

The Company maintains the Fourth Amended and Restated Note Purchase and Private Shelf Agreement (the "Prudential Agreement") with PGIM, Inc. and its affiliates, which was renewed on July 30, 2021 and expires on July 30, 2024. The Prudential Agreement has an initial borrowing capacity of $150.0 million. As of June 30, 2022, the Company had no notes issued and  $150.0 million borrowing capacity available under the Prudential Agreement.

Project Bonds

The Company, Allen County, Indiana and certain institutional investors maintain 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. These Project Bonds ("Tax increment financing debt") bear interest at 3.6 percent per annum. Interest and principal balance of the Project Bonds 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.

New York Life Agreement

The Company maintains an uncommitted and unsecured private shelf agreement with NYL Investors LLC and its affiliates (the "New York Life Agreement"), which was renewed on July 30, 2021 and expires on July 30, 2024. The New York Life Agreement has a maximum aggregate borrowing capacity of $200.0 million. On September 26, 2018, the Company issued and sold $75.0 million of fixed rate senior notes 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 interest rate indebtedness. As of June 30, 2022, there was $125.0 million remaining borrowing capacity under the New York Life Agreement.

Credit Agreement

The Company maintains the Fourth Amended and Restated Credit Agreement (the "Credit Agreement”). The Credit Agreement was renewed on May 13, 2021, has a maturity date of May 13, 2026. On May 11, 2022, the Company entered into Amendment No. 1 that increased the commitment amount from $250.0 million to $350.0 million. The Credit Agreement provides that the Borrowers may request an increase in the aggregate commitments by up to $125.0 million subject to agreement of the lenders (not to exceed a total commitment of $475.0 million). 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, which fee is 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.

As of June 30, 2022, the Company had $217.7 million outstanding borrowings, $4.0 million in letters of credit outstanding, and $128.3 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 $19.3 million. As of June 30, 2022, there were $4.0 million outstanding borrowings and $15.3 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 Prudential Agreement, the Project Bonds, the New York Life Agreement, and the Credit 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 June 30, 2022.

11. 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:

	Second Quarter Ended				Six Months Ended
(In millions, except per share amounts)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Numerator:
Net income attributable to Franklin Electric Co., Inc.	$	59.4	$	39.1	$	89.1	$	67.0
Less: Earnings allocated to participating securities	0.2		0.2		0.4		0.4
Net income available to common shareholders	$	59.2	$	38.9	$	88.7	$	66.6
Denominator:
Basic weighted average common shares outstanding	46.3		46.5		46.4		46.4
Effect of dilutive securities:
Non-participating employee stock options, performance awards, and deferred shares to non-employee directors	0.6		0.6		0.7		0.6
Diluted weighted average common shares outstanding	46.9		47.1		47.1		47.0
Basic earnings per share	$	1.27	$	0.84	$	1.91	$	1.44
Diluted earnings per share	$	1.26	$	0.83	$	1.89	$	1.42

There were 0.1 million and 0.0 million stock options outstanding for the second quarters ended June 30, 2022 and June 30, 2021, and 0.1 million and 0.1 million stock options outstanding for the six months ended June 30, 2022 and June 30, 2021, respectively, that were excluded from the computation of diluted earnings per share, as their inclusion would be anti-dilutive.

12. EQUITY ROLL FORWARD

The schedules below set forth equity changes in the second quarters ended June 30, 2022 and June 30, 2021:

(In thousands)		Additional Paid in Capital		Retained Earnings		Minimum Pension Liability		Cumulative Translation Adjustment		Noncontrolling Interest		Total Equity		Redeemable Noncontrolling Interest
Balance as of March 31, 2022	4,635	$	314,935	$	861,156	$	(48,144)	$	(170,875)	$	2,352	$	964,059	$	106
Net income				59,364						229		59,593		170
Dividends on common stock (0.195/share)				(9,076)								(9,076)
Common stock issued		1,570										1,573
Common stock repurchased				(11,309)								(11,324)
Share-based compensation		2,332										2,337
Currency translation adjustment								(19,418)		(95)		(19,513)		8
Pension liability, net of tax						924						924
Balance as of June 30, 2022	4,628	$	318,837	$	900,135	$	(47,220)	$	(190,293)	$	2,486	$	988,573	$	284

All values are in US Dollars.

(In thousands)		Additional Paid in Capital		Retained Earnings		Minimum Pension Liability		Cumulative Translation Adjustment		Noncontrolling Interest		Total Equity		Redeemable Noncontrolling Interest
Balance as of March 31, 2021	4,641	$	292,668	$	779,456	$	(51,782)	$	(163,554)	$	2,257	$	863,686	$	(168)
Net Income				39,141						270		39,411		(48)
Dividends on common stock (0.175/share)				(8,177)								(8,177)
Common stock issued		3,894										3,906
Common stock repurchased				(6,373)								(6,382)
Share-based compensation		2,382										2,383
Currency translation adjustment								8,114		14		8,128		7
Pension liability, net of taxes						885						885
Balance as of June 30, 2021	4,645	$	298,944	$	804,047	$	(50,897)	$	(155,440)	$	2,541	$	903,840	$	(209)

All values are in US Dollars.

The schedule below set forth equity changes in the six months ended June 30, 2022 and June 30, 2021:

(In thousands)		Additional Paid in Capital		Retained Earnings		Minimum Pension Liability		Cumulative Translation Adjustment		Noncontrolling Interest		Total Equity		Redeemable Noncontrolling Interest
Balance as of December 31, 2021	4,648	$	310,617	$	859,817	$	(49,076)	$	(179,505)	$	2,161	$	948,662	$	(19)
Net Income				89,129						464		89,593		289
Dividends on common stock (0.390/share)				(18,205)								(18,205)
Common stock issued		1,912										1,916
Common stock repurchased				(30,606)								(30,644)
Share-based compensation		6,308										6,322
Currency translation adjustment								(10,788)		(139)		(10,927)		14
Pension liability, net of taxes						1,856						1,856
Balance as of June 30, 2022	4,628	$	318,837	$	900,135	$	(47,220)	$	(190,293)	$	2,486	$	988,573	$	284
(In thousands)		Additional Paid in Capital		Retained Earnings		Minimum Pension Liability		Cumulative Translation Adjustment		Noncontrolling Interest		Total Equity		Redeemable Noncontrolling Interest
Balance as of December 31, 2020	4,622	$	283,420	$	764,562	$	(52,666)	$	(152,105)	$	2,116	$	849,949	$	(245)
Net Income				67,021						477		67,498		28
Dividends on common stock (0.350/share)				(16,320)								(16,320)
Common stock issued		8,963										8,989
Common stock repurchased				(11,216)								(11,231)
Share-based compensation		6,561										6,573
Currency translation adjustment								(3,335)		(52)		(3,387)		8
Pension liability, net of taxes						1,769						1,769
Balance as of June 30, 2021	4,645	$	298,944	$	804,047	$	(50,897)	$	(155,440)	$	2,541	$	903,840	$	(209)

All values are in US Dollars.

13. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

Changes in accumulated other comprehensive income/(loss) by component for the six months ended June 30, 2022 and June 30, 2021, are summarized below:

(In millions)	Foreign Currency Translation Adjustments		Pension and Post-Retirement Plan Benefit Adjustments (2)		Total
For the six months ended June 30, 2022:
Balance as of December 31, 2021	$	(179.6)	$	(49.0)	$	(228.6)
Other comprehensive income/(loss) before reclassifications	(10.7)		—		(10.7)
Amounts reclassified from accumulated other comprehensive income/(loss) (1)	—		1.8		1.8
Net other comprehensive income/(loss)	(10.7)		1.8		(8.9)
Balance as of June 30, 2022	$	(190.3)	$	(47.2)	$	(237.5)
For the six months ended June 30, 2021:
Balance as of December 31, 2020	$	(152.2)	$	(52.6)	$	(204.8)
Other comprehensive income/(loss) before reclassifications	(3.3)		—		(3.3)
Amounts reclassified from accumulated other comprehensive income/(loss) (1)	—		1.8		1.8
Net other comprehensive income/(loss)	(3.3)		1.8		(1.5)
Balance as of June 30, 2021	$	(155.5)	$	(50.8)	$	(206.3)

(1) This accumulated other comprehensive income/(loss) component is included in the computation of net periodic pension cost (refer to Note 7 for additional details) and is included in the "Other income/(expense), net" line of the Company's condensed consolidated statements of income.

(2) Net of tax expense of $0.5 million and $0.5 million for the six months ended June 30, 2022 and June 30, 2021, respectively.

Amounts related to noncontrolling interests were not material.

14. SEGMENT AND GEOGRAPHIC INFORMATION

The accounting policies of the operating segments are the same as those described in Note 1 of the Company's Form 10-K. Revenue is recognized based on the invoice price at the point in time when the customer obtains control of the product, which is typically upon shipment to the customer. The Water and Fueling segments include manufacturing operations and supply certain components and finished goods, both between segments and to the Distribution segment. The Company reports these product transfers between Water and Fueling as inventory transfers as a significant number of the Company's manufacturing facilities are shared across segments for scale and efficiency purposes. The Company reports intersegment transfers from Water to Distribution as intersegment revenue at market prices to properly reflect the commercial arrangement of vendor to customer that exists between the Water and Distribution segments.

Segment operating income is a key financial performance measure. Operating income by segment is based on net sales less identifiable operating expenses and allocations and includes profits recorded on sales to other segments of the Company.

Financial information by reportable business segment is included in the following summary:

	Second Quarter Ended				Six Months Ended
(In millions)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
	Net sales
Water Systems
External sales
United States & Canada	$	158.4	$	114.1	$	293.1	$	198.3
Latin America	41.7		34.7		79.6		66.4
Europe, Middle East & Africa	49.7		51.4		100.7		95.8
Asia Pacific	24.2		20.1		44.7		40.3
Intersegment sales
United States & Canada	36.5		26.9		65.0		44.0
Total sales	310.5		247.2		583.1		444.8
Distribution
External sales
United States & Canada	191.1		144.8		326.0		240.5
Intersegment sales	—		—		—		—
Total sales	191.1		144.8		326.0		240.5
Fueling Systems
External sales
United States & Canada	64.2		50.6		116.0		88.1
All other	21.8		21.6		42.5		40.9
Intersegment sales	—		—		—		—
Total sales	86.0		72.2		158.5		129.0
Intersegment Eliminations/Other	(36.5)		(26.9)		(65.0)		(44.0)
Consolidated	$	551.1	$	437.3	$	1,002.6	$	770.3
	Second Quarter Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
	Operating income/(loss)
Water Systems	$	49.0	$	34.6	$	82.2	$	65.9
Distribution	23.3		16.0		32.7		18.0
Fueling Systems	26.1		18.5		43.8		33.4
Intersegment Eliminations/Other	(17.4)		(17.5)		(37.8)		(31.9)
Consolidated	$	81.0	$	51.6	$	120.9	$	85.4
	June 30, 2022		December 31, 2021
---	---	---	---	---
	Total assets
Water Systems	$	1,019.3	$	894.4
Distribution	407.2		363.0
Fueling Systems	278.8		273.6
Other	46.2		44.2
Consolidated	$	1,751.5	$	1,575.2

Other Assets are generally Corporate assets that are not allocated to the segments and are comprised primarily of cash and property, plant and equipment.

15. 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 continuing position that its products were not the cause of any alleged damage. The Company's response to the expert's final report is due in January 2023, at which time the French court will determine whether the merits of the claim warrant additional proceedings. The Company cannot predict the ultimate outcome of this matter. Any exposure related to this matter is neither probable nor 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 June 30, 2022, the Company had $13.9 million of commitments primarily for capital expenditures and purchase of raw materials to be used in production.

The Company provides warranties on most of its products. The warranty terms vary but are generally two years to five years from date of manufacture or one year to five years from 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. The Company believes that the warranty reserve is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the reserve.

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 condensed consolidated balance sheet for the six months ended June 30, 2022, are as follows:

(In millions)
Balance as of December 31, 2021	$	10.5
Accruals related to product warranties	4.8
Additions related to acquisitions	—
Reductions for payments made	(4.3)
Balance as of June 30, 2022	$	11.0

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

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 in effect at the inception of a lease when determining the present value of future lease payments.

Some 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.

The components of the Company’s operating lease portfolio as of the second quarter and six months ended June 30, 2022 are as follows:

	Second Quarter Ended				Six Months Ended
Lease Cost (in millions):	June 30, 2022		June 30, 2021		June 30, 2022			June 30, 2021
Operating lease cost	$	4.3	$	2.7	$	8.5		$	5.7
Short-term lease cost	—		0.1		0.1			0.4
Other Information:
Weighted-average remaining lease term					4.2 years			4.1 years
Weighted-average discount rate					3.8		%	4.0		%

As of June 30, 2022, the Company has approximately $2.9 million of additional ROU assets related to leases that have not yet commenced, but create future lease obligations.

The minimum rental payments for non-cancellable operating leases as of June 30, 2022, are as follows:

(In millions)	2022		2023		2024		2025		2026		Thereafter
Future Minimum Rental Payments	$	8.6	$	14.6	$	9.6	$	6.4	$	5.1	$	7.5

16. SHARE-BASED COMPENSATION

The Franklin Electric Co., Inc. 2017 Stock Plan (the "2017 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. The number of shares that may be issued under the Plan is 1,400,000. 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 stock-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 also maintains the Amended and Restated Franklin Electric Co., Inc. Stock Plan (the "2009 Stock Plan") which, as amended in 2009, provided for discretionary grants of stock options and stock awards. The 2009 Stock Plan authorized 4,400,000 shares for issuance as follows:

2009 Stock Plan	Authorized Shares
Stock Options	3,200,000
Stock Awards	1,200,000

All options in the 2009 Stock Plan have been awarded and no additional awards are granted out of the 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.

Stock Options:

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.

The assumptions used for the Black-Scholes model to determine the fair value of options granted during the six months ended June 30, 2022 and June 30, 2021 are as follows:

	June 30, 2022		June 30, 2021
Risk-free interest rate	1.87	%	0.66	%
Dividend yield	0.93	%	0.96	%
Volatility factor	33.88	%	34.98	%
Expected term	5.5 years		5.5 years

A summary of the Company’s outstanding stock option activity and related information for the six months ended June 30, 2022 is as follows:

(Shares in thousands)	June 30, 2022
Stock Options	Shares	Weighted-Average Exercise Price
Outstanding at beginning of period	1,043	$	49.21
Granted	110	83.90
Exercised	(39)	48.84
Forfeited	(19)	73.52
Expired	(3)	$	73.14
Outstanding at end of period	1,092	$	52.23
Expected to vest after applying forfeiture rate	1,090	$	52.18
Vested and exercisable at end of period	858	$	46.04

A summary of the weighted-average remaining contractual term and aggregate intrinsic value as of June 30, 2022 is as follows:

	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (000's)
Outstanding at end of period	5.68 years	$	24,068
Expected to vest after applying forfeiture rate	5.68 years	$	24,066
Vested and exercisable at end of period	4.81 years	$	23,363

The total intrinsic value of options exercised during the six months ended June 30, 2022 and June 30, 2021 was $1.1 million and $11.2 million, respectively.

As of June 30, 2022, there was $1.3 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 1.88 years.

Stock/Stock Unit Awards:

A summary of the Company’s restricted stock/stock unit award activity and related information for the six months ended June 30, 2022 is as follows:

(Shares in thousands)	June 30, 2022
Restricted Stock/Stock Unit Awards	Shares	Weighted-Average Grant-<br>Date Fair Value
Non-vested at beginning of period	348	$	58.20
Awarded	121	81.16
Vested	(180)	50.53
Forfeited	(24)	69.69
Non-vested at end of period	265	$	72.83

As of June 30, 2022, there was $12.5 million of total unrecognized compensation cost related to non-vested restricted stock/stock unit awards granted under the stock plans. That cost is expected to be recognized over a weighted-average period of 1.63 years.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Second Quarter 2022 vs. Second Quarter 2021

OVERVIEW

Sales in the second quarter of 2022 increased from the second quarter of last year. Sales in the quarter increased by $113.8 million, or about 26 percent, due to higher sales across all three segments, achieved by price realization, acquisitions, and volume. The Company's consolidated gross profit was $189.3 million for the second quarter of 2022, an increase from the prior year’s second quarter. The gross profit as a percent of net sales was 34.3 percent in the second quarter of 2022 versus 34.8 percent during the second quarter of 2021. Diluted earnings per share in the second quarter of 2022 were up from the same period last year.

RESULTS OF OPERATIONS

Net Sales

Net sales in the second quarter of 2022 were $551.1 million, an increase of $113.8 million or about 26 percent compared to 2021 second quarter sales of $437.3 million. Acquisition related sales were $34.4 million. Sales decreased by $19.4 million or about 4 percent in the second quarter of 2022 due to foreign currency translation. The Company’s organic sales growth, led by price realization, increased about 23 percent compared to the second quarter of 2021.

	Net Sales
(In millions)	Q2 2022		Q2 2021		2022 v 2021
Water Systems	$	310.5	$	247.2	$	63.3
Fueling Systems	86.0		72.2		13.8
Distribution	191.1		144.8		46.3
Eliminations/Other	(36.5)		(26.9)		(9.6)
Consolidated	$	551.1	$	437.3	$	113.8

Net Sales-Water Systems

Water Systems sales were $310.5 million in the second quarter of 2022, an increase of $63.3 million or about 26 percent versus the second quarter of 2021 sales of $247.2 million. Acquisition related sales were $14.8 million. Water Systems sales decreased by $17.9 million or about 7 percent in the quarter due to foreign currency translation. Excluding acquisitions and foreign currency translation, Water Systems sales were up $66.4 million or about 27 percent compared to the second quarter of 2021. This revenue growth was primarily from price and volume, which was up due to strong end market demand.

Water Systems sales in the U.S. and Canada were up about 38 percent compared to the second quarter of 2021. The impact of foreign currency translation decreased sales by about 1 percent. In the second quarter of 2022, sales from businesses acquired since the second quarter of 2021 were $12.9 million. Organic Water Systems sales in the U.S. and Canada were 30 percent in the second quarter. Sales of groundwater pumping equipment increased by about 38 percent and sales of all surface pumping equipment increased by about 22 percent versus the first quarter 2021, due to strong end market demand and pricing.

Water Systems sales in markets outside the U.S. and Canada increased by 9 percent overall. The impact of foreign currency translation decreased sales by about 16 percent. In the second quarter of 2022, sales from businesses acquired since the second quarter of 2021 were $1.9 million. Organic Water Systems sales in markets outside the U.S. and Canada, increased by 23 percent, primarily driven by higher sales in Europe, the Middle East and African (EMEA) markets. The Company also had higher sales in the Latin American and the Asia Pacific markets.

Net Sales-Fueling Systems

Fueling Systems sales were $86.0 million in the second quarter of 2022, an increase of $13.8 million or about 19 percent versus the second quarter of 2021 sales of $72.2 million. Fueling Systems sales decreased by $1.5 million or about 2 percent in the quarter due to foreign currency translation. Fueling Systems organic sales increased by $15.3 million or about 21 percent compared to the second quarter of 2021, this revenue growth was from price and volume.

Fueling Systems sales in the U.S. and Canada increased by about 20 percent compared to the second quarter of 2021. The increase was due, in part, to robust demand for infrastructure buildout in the U.S. Outside the U.S. and Canada, Fueling

Systems revenues decreased by about 6 percent, as sales increases of 3 percent in the rest of the world outside of China were not enough to offset lower sales in China.

Net Sales - Distribution

Distribution sales were $191.1 million in the second quarter of 2022, versus the second quarter of 2021 sales of $144.8 million. In the second quarter of 2022, sales from businesses acquired since the second quarter of 2021 were $19.6 million. The Distribution segment organic sales increased 18 percent compared to the second quarter of 2021. Revenue growth was primarily from price and was driven by broad-based demand in all regions and product categories.

Cost of Sales

Cost of sales as a percent of net sales for the second quarter of 2022 was 65.7 percent and 65.2 percent for the second quarter of 2021. Correspondingly, the gross profit margin was 34.3 percent and 34.8 percent for the second quarters of 2022 and 2021, respectively. The Company's consolidated gross profit was $189.3 million for the second quarter of 2022, up $37.1 million from the gross profit of $152.2 million in the second quarter of 2021. The gross profit increase was due to higher sales. In the second quarter, the gross profit margin percentage was down 50 basis points, as realized pricing actions offset inflationary cost increases; however, supply constraints caused some unfavorable manufacturing absorption variances.

Selling, General, and Administrative ("SG&A")

Selling, general, and administrative (SG&A) expenses were $108.3 million in the second quarter of 2022 compared to $100.5 million in the second quarter of 2021. SG&A expenses from acquired businesses were $7.6 million and excluding the acquired entities, SG&A expenses were higher by $0.2 million versus the prior year.

Restructuring Expenses

There were no restructuring expenses for the second quarter of 2022. Restructuring expenses for the second quarter of 2021 were $0.2 million and related to continued miscellaneous manufacturing and distribution realignment activities in the Water Systems segment.

Operating Income

Operating income was $81.0 million in the second quarter of 2022, up $29.4 million or about 57 percent from $51.6 million in the second quarter of 2021.

	Operating income (loss)
(In millions)	Q2 2022		Q2 2021		2022 v 2021
Water Systems	$	49.0	$	34.6	$	14.4
Fueling Systems	26.1		18.5		7.6
Distribution	23.3		16.0		7.3
Eliminations/Other	(17.4)		(17.5)		0.1
Consolidated	$	81.0	$	51.6	$	29.4

Operating Income-Water Systems

Water Systems operating income was $49.0 million in the second quarter of 2022, up $14.4 million or about 42 percent versus the second quarter of 2021 and operating income margin was 15.8 percent, an increase of 180 basis points, compared to the 14.0 percent in the second quarter of 2021. The increase in operating income was primarily due to higher sales. Operating income margin improved due to leverage on fixed cost from higher sales, price realization and cost management.

Operating Income-Fueling Systems

Fueling Systems operating income was $26.1 million in the second quarter of 2022, up $7.6 million or about 41 percent compared to $18.5 million in the second quarter of 2021, and the second quarter operating income margin was 30.3 percent, an increase of 470 basis points from the 25.6 percent of net sales in the second quarter of 2021. The increase in operating income was primarily due to higher sales. Operating income margin improved due to leverage on fixed cost from higher sales, price realization and cost management.

Operating Income-Distribution

Distribution operating income was $23.3 million in the second quarter of 2022, and the second quarter operating income margin was 12.2 percent. Distribution operating income was $16.0 million in the second quarter of 2021, and the second quarter operating income margin was 11.0 percent. The increase in operating income was primarily due to higher sales. The increase in operating income margin was related to higher revenues, primarily price realization.

Operating Income-Eliminations/Other

Operating income-Eliminations/Other is composed primarily of unallocated general and administrative expenses and inter-segment sales and profit eliminations. The inter-segment profit elimination impact in the second quarter of 2022 versus the second quarter of 2021 was unfavorable by $1.8 million. General and administrative expenses were lower by $1.9 million primarily due to lower variable compensation.

Interest Expense

Interest expense for the second quarter of 2022 was $2.9 million, up due to higher debt and $0.7 million from interest penalties on an indirect tax settlement in a foreign jurisdiction. Interest expense for the second quarter of 2021 was $1.4 million.

Other Income or Expense

Other income or expense was a loss of $1.2 million in the second quarter of 2022 and included an unfavorable indirect tax settlement in a foreign jurisdiction of about $1.0 million and a loss of $0.4 million in the second quarter of 2021.

Foreign Exchange

Foreign currency-based transactions produced a loss for the second quarter of 2022 of $0.3 million, primarily due to the Turkish lira relative to the U.S. dollar. Foreign currency-based transactions produced a loss for the second quarter of 2021 of $1.2 million, primarily due to the Argentinian peso relative to the U.S. dollar.

Income Taxes

The provision for income taxes in the second quarter of 2022 and 2021 was $16.8 million and $9.3 million, respectively. The effective tax rate for the second quarter of 2022 was about 22 percent and, before the impact of discrete events, was about 21 percent. The effective tax rate for the second quarter of 2021 was about 19 percent and, before the impact of discrete events, was about 20 percent. The increase in the effective tax rate was primarily a result of net unfavorable discrete events recorded in the second quarter of 2022, as opposed to net favorable discrete events, recorded in the second quarter of 2021, primarily related to excess tax benefits from share-based compensation. The tax rate as a percentage of pre-tax earnings for the full year 2022 is projected to be about 21 percent, compared to the full year 2021 tax rate of about 21 percent, both before discrete adjustments.

Net Income

Net income for the second quarter of 2022 was $59.8 million compared to the prior year second quarter net income of $39.4 million. Net income attributable to Franklin Electric Co., Inc. for the second quarter of 2022 was $59.4 million, or $1.26 per diluted share, compared to the prior year second quarter net income attributable to Franklin Electric Co., Inc. of $39.1 million or $0.83 per diluted share.

First Half of 2022 vs. First Half of 2021

OVERVIEW

Sales in the first half of 2022 were up from the same period last year. Sales in the first half increased by $232.3 million, or about 30 percent, due to higher sales across all three segments, achieved by price realization, acquisitions, and volume. The Company's consolidated gross profit was $334.6 million for the first half of 2022, an increase of $66.8 million or about 25 percent from the first half of 2021. Diluted earnings per share in the first half of 2022 were up from the same period last year.

RESULTS OF OPERATIONS

Net Sales

Net sales in the first half of 2022 were $1,002.6 million, an increase of $232.3 million or about 30 percent compared to 2021 first half sales of $770.3 million. Acquisition related sales were $82.6 million. Sales decreased by $32.5 million or about 4 percent in the first half of 2022 due to foreign currency translation. The Company’s organic sales growth, led by price realization, was about 24 percent.

	Net Sales
(In millions)	YTD June 30, 2022		YTD June 30, 2021		2022 v 2021
Water Systems	$	583.1	$	444.8	$	138.3
Fueling Systems	158.5		129.0		29.5
Distribution	326.0		240.5		85.5
Eliminations/Other	(65.0)		(44.0)		(21.0)
Consolidated	$	1,002.6	$	770.3	$	232.3

Net Sales-Water Systems

Water Systems sales were $583.1 million in the first half of 2022, an increase of $138.3 million or about 31 percent versus the first half of 2021. The incremental impact of sales from acquired businesses was $48.7 million. Foreign currency translation changes decreased sales $30.3 million or about 7 percent compared to sales in the first half of 2021. The Water Systems sales change in the first half of 2022, excluding acquisitions and foreign currency translation, was an increase of $119.9 million or about 27 percent. This revenue growth was primarily from price and volume, which was up due to strong end market demand.

Water Systems sales in the U.S. and Canada increased by about 48 percent compared to the first half of 2021. The incremental impact of sales from acquired businesses was $45.0 million. Sales revenue decreased by $0.8 million in the first half of 2022 due to foreign currency translation. In the first half of 2022, organic Water Systems sales in the U.S. and Canada were 30 percent. Sales of groundwater pumping equipment increased by about 40 percent and sales of all surface pumping equipment increased by about 21 percent versus the first quarter 2021, due to strong end market demand and pricing.

Water Systems sales in markets outside the U.S. and Canada increased by about 11 percent compared to the first half of 2021. The incremental impact of sales from acquired businesses was $3.7 million. Sales revenue decreased by $29.5 million or about 15 percent in the first half of 2022 due to foreign currency translation. Water Systems organic sales in markets outside the U.S. and Canada change in the first half of 2022, excluding foreign currency translation and acquisitions, was an increase of about 24 percent. Water Systems sales grew in all major geographic regions; EMEA, Latin America and the Asia Pacific markets, on strong end market demand and pricing.

Net Sales-Fueling Systems

Fueling Systems sales were $158.5 million in the first half of 2022, an increase of $29.5 million or about 23 percent from the first half of 2021. Foreign currency translation changes decreased sales $2.2 million or about 2 percent compared to sales in the first half of 2021. The Fueling Systems sales change in the first half of 2022, excluding foreign currency translation, was an increase of about 25 percent. Revenue growth was from price and volume.

Fueling Systems sales in the U.S. and Canada increased by about 26 percent during the first half. The increase was due, in part, to robust demand for infrastructure buildout in the U.S. Outside the U.S. and Canada, Fueling Systems revenues decreased by about 2 percent, as sales increases of 4 percent in the rest of the world outside of China were not enough to offset lower sales in China.

Net Sales - Distribution

Distribution sales were $326.0 million in the first half of 2022, an increase of $85.5 million or about 36 percent, versus the first half of 2021 sales of $240.5 million. The incremental impact of sales from acquired businesses was $33.9 million. Distribution segment organic sales increased about 21 percent compared to the first half of 2021. Revenue growth was primarily from price and was driven by broad-based demand in all regions and product categories.

Cost of Sales

Cost of sales as a percent of net sales for the first half of 2022 and 2021 was 66.6 percent and 65.2 percent, respectively. Correspondingly, the gross profit margin was 33.4 percent and 34.8 percent, respectively. The Company's consolidated gross profit was $334.6 million for the first half of 2022, up $66.8 million from the gross profit of $267.8 million in the first half of 2021. The gross profit increase was primarily due to higher sales. The decline in gross profit margin percentage is partially attributable to supply constraints causing unfavorable manufacturing absorption variances, as selling price actions offset inflationary cost increases.

Selling, General, and Administrative ("SG&A")

Selling, general, and administrative expenses were $213.0 million in the first half of 2022, and increased by $30.9 million or 17 percent in the first half of 2022 compared to $182.1 million in the first half of last year. SG&A expenses from acquired

businesses were $20.0 million and excluding the acquired entities, SG&A expenses were higher by $10.9 million or 6 percent versus the prior year. SG&A costs as a percent of Net Sales were below 2021.

Restructuring Expenses

Restructuring expenses for the first half of 2022 were $0.7 million. Restructuring expenses were $0.6 million in the Water Systems segment from continued miscellaneous manufacturing and distribution realignment activities and $0.1 in distribution related to branch consolidations and other asset rationalizations in the Headwater distribution segment. Restructuring expenses for the first half of 2021 were $0.3 million. Restructuring expenses were $0.2 million in the Water Systems segment from continued miscellaneous manufacturing and distribution realignment activities and $0.1 in distribution related to branch consolidations and other asset rationalizations in the Headwater distribution segment.

Operating Income

Operating income was $120.9 million in the first half of 2022, up $35.5 million or about 42 percent from $85.4 million in the first half of 2021.

	Operating income (loss)
(In millions)	YTD June 30, 2022		YTD June 30, 2021		2022 v 2021
Water Systems	$	82.2	$	65.9	$	16.3
Fueling Systems	43.8		33.4		10.4
Distribution	32.7		18.0		14.7
Eliminations/Other	(37.8)		(31.9)		(5.9)
Consolidated	$	120.9	$	85.4	$	35.5

Operating Income-Water Systems

Water Systems operating income was $82.2 million in the first half of 2022 compared to $65.9 million in the first half of 2021, an increase of about 25 percent. The first half operating income margin was 14.1 percent and decreased by 70 basis points compared to the first half of 2021. Operating income margin decreased in Water Systems primarily because supply constraints caused unfavorable absorption variances, as selling price actions offset inflationary cost increases.

Operating Income-Fueling Systems

Fueling Systems operating income was $43.8 million in the first half of 2022 compared to $33.4 million in the first half of 2021. The first half operating income margin was 27.6 percent compared to 25.9 percent of net sales in the first half of 2021, an increase of 170 basis points. The increase in operating income was primarily due to higher sales. Operating income margin increased in Fueling Systems primarily due to leverage on fixed cost from higher sales, price realization and cost management.

Operating Income-Distribution

Distribution operating income was $32.7 million in the first half of 2022 and operating income margin was 10.0 percent. Distribution operating income was $18.0 million in the first half of 2021 and operating income margin was 7.5 percent. The increase in operating income and margin is related to higher revenues, primarily price realization.

Operating Income-Eliminations/Other

Operating income-Eliminations/Other is composed primarily of inter-segment sales and profit eliminations and unallocated general and administrative expenses. The inter-segment profit elimination impact in the first half of 2022 versus the first half of 2021 was $4.9 million. General and administrative expenses were higher by $1.0 million or about 3 percent to last year in the first half.

Interest Expense

Interest expense for the first half of 2022 was $4.4 million, up due to higher debt and included a $0.7 million from interest penalties on an indirect tax settlement in a foreign jurisdiction. Interest expense for the first half of 2021 was $2.5 million.

Other Income or Expense

Other income or expense was a loss of $1.5 million in the first half of 2022 and included an unfavorable indirect tax settlement in a foreign jurisdiction of about $1.0 million. Other income or expense was a loss of $0.5 million in the first half of 2021.

Foreign Exchange

Foreign currency-based transactions for the first half of 2022 was a loss $0.9 million, primarily due to the Argentinian peso relative to the U.S. dollar. Foreign currency-based transactions for the first half of 2021 was a loss $1.2 million, primarily due to the Argentinian peso relative to the U.S. dollar.

Income Taxes

The provision for income taxes in the first half of 2022 and 2021 was $24.2 million and $13.6 million, respectively. The effective tax rate for the first half of 2022 before and after the impact of discrete events was about 21 percent. The effective tax rate in the first half of 2021 was about 17 percent and, before the impact of discrete events, was about 20 percent. The increase in the effective tax rate was primarily a result of net unfavorable discrete events recorded in the first half of 2022 compared to net favorable discrete events in the first half of 2021, primarily related to excess tax benefits from share-based compensation. The tax rate as a percentage of pre-tax earnings for the full year 2022 is projected to be about 21 percent, compared to the full year 2021 tax rate of about 21 percent, both before discrete adjustments.

Net Income

Net income for the first half of 2022 was $89.9 million compared to 2021 first half net income of $67.5 million. Net income attributable to Franklin Electric Co., Inc. for the first half of 2022 was $89.1 million, or $1.89 per diluted share, compared to 2021 first half net income attributable to Franklin Electric Co., Inc. of $67.0 million or $1.42 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 June 30, 2022 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 June 30, 2022 the Company had a $350.0 million revolving credit facility. The facility is scheduled to mature on May 13, 2026. As of June 30, 2022, the Company had $128.3 million borrowing capacity under the Credit Agreement as $4.0 million in letters of commercial and standby letters of credit were outstanding and undrawn and $217.7 million in revolver borrowings were drawn and outstanding, which were primarily used for funding working capital requirements.

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") with a remaining borrowing capacity of  $125.0 million as of June 30, 2022. The Company also has other long-term debt borrowings outstanding as of June 30, 2022. See Note 10 - Debt for additional specifics regarding these obligations and future maturities.

At June 30, 2022, the Company had $28.5 million of cash and cash equivalents held in foreign jurisdictions, which is intended to be used to fund foreign operations. There is currently no need or intent to repatriate 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 for the first six months of 2022 and 2021.

(in millions)	2022		2021
Net cash flows from operating activities	$	(62.5)	$	35.5
Net cash flows from investing activities	(21.5)		(193.7)
Net cash flows from financing activities	79.3		110.7
Impact of exchange rates on cash and cash equivalents	(2.6)		(1.7)
Change in cash and cash equivalents	$	(7.3)	$	(49.2)

Cash Flows from Operating Activities

2022 vs. 2021

Net cash used by operating activities was $62.5 million for the six months ended June 30, 2022 compared to $35.5 million provided by operating activities for the six months ended June 30, 2021. The increase in cash used by operating activities was primarily due to increased working capital requirements in support of supply chain resiliency and meeting the strong demand from our customers.

Cash Flows from Investing Activities

2022 vs. 2021

Net cash used in investing activities was $21.5 million for the six months ended June 30, 2022 compared to $193.7 million used in investing activities for the six months ended June 30, 2021. The decrease in cash used in investing activities was attributable to decreased acquisition activity in 2022.

Cash Flows from Financing Activities

2022 vs. 2021

Net cash provided by financing activities was $79.3 million for the six months ended June 30, 2022 compared to $110.7 million provided by financing activities for the six months ended June 30, 2021. The decrease in cash provided by financing activities was attributable to increased common stock repurchases slightly offset by decreased proceeds from debt and common stock issuances.

FACTORS THAT MAY AFFECT FUTURE RESULTS

This quarterly report on Form 10-Q 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 regional or 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 and availability, technology factors, integration of acquisitions, litigation, government and regulatory actions, the Company’s accounting policies, and other risks, all as described in the Company's Securities and Exchange Commission filings, included in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and in Exhibit 99.1 thereto. Any forward-looking statements included in this Form 10-Q 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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in the Company's exposure to market risk during the second quarter ended June 30, 2022. For additional information, refer to Part II, Item 7A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report (the "Evaluation Date"), the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rules 13a-15. Based upon that evaluation, the Company's Chief Executive Officer and the Company's Chief Financial Officer concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures were effective.

There have been no changes in the Company's internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15 under the Exchange Act during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect the Company's internal control over financial reporting.

ITEM 1. 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 15 - Commitments and Contingencies, in the Notes to Consolidated Financial Statements included in Part I, Item 1, "Notes to Condensed Consolidated Financial Statements (Unaudited)," of this Quarterly Report on Form 10-Q, which is incorporated into this Item 1 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 1A. RISK FACTORS

There have been no material changes to the Company's risk factors as set forth in the annual report on Form 10-K for the fiscal year ended December 31, 2021 with the exception of the update to the following risk factor. Additional risks and uncertainties, not presently known to the Company or currently deemed immaterial, could negatively impact the Company’s results of operations or financial condition in the future.

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.

In the second quarter of 2022, the Company concluded that Turkey represents a highly inflationary economy as its projected three-year cumulative inflation rate exceeds 100%. As a result, the Company started remeasuring the financial statements for the Company’s Turkish operations in accordance with ASC 830 "Foreign Currency Matters" as of the beginning of the second quarter of 2022. 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 would be reflected in earnings, which could result in volatility within the Company’s earnings, rather than as a component of the Company’s comprehensive income within stockholders’ equity. Turkey becoming a highly inflationary economy may have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Issuer Repurchases of Equity Securities

In April 2007, the Company's Board of Directors 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. The Company repurchased 130,322 shares for approximately $9.8 million under the plan during the second quarter of 2022. The maximum number of shares that may still be purchased under this plan as of June 30, 2022 is 423,914.

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 yet to be Repurchased
April 1 - April 30	62,922	80.6	62,922	491,314
May 1 - May 31	—	—	—	491,314
June 1 - June 30	67,400	70.09	67,400	423,914
Total	130,322	75.16	130,322	423,914

ITEM 6. EXHIBITS

| Number | Description | | --- | --- || 3.1 | Amended and Restated Articles of Incorporation of Franklin Electric Co., Inc. (incorporated by reference to Exhibit 3.1 of the Company's Form 8-K filed on May 7, 2019) | | --- | --- | | 3.2 | Amended and Restated Bylaws of Franklin Electric Co., Inc., as amended January 27, 2020 (incorporated by reference to Exhibit 3.1 of the Company's Form 8-K filed on January 30, 2020) | | 10.1 | Employment Security Agreement between the Company andKenneth Keene(filed herewith)* | | 10.2 | Employment Security Agreement between the Company andBrent Spikes(filed herewith)* | | 10.3 | Form of Confidentiality and Non-Compete Agreement between the Company and Kenneth Keene and Brent Spikes (incorporated by reference to Exhibit 10.15 of the Company’s Form 10-K for the fiscal year ended January 1, 2005)* | | 10.4 | Amendment No. 1 dated May 11, 2022 to the Fourth Amended and Restated Credit Agreement, dated May 13, 2021, by and among Franklin Electric Co., Inc., Franklin Electric B.V., JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and the lenders identified therein (incorporated by reference to Exhibit 10.1 of the Company's Form 8-K filed on May 11, 2022) | | 31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1 | Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 32.2 | Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101 | The following financial information from Franklin Electric Co., Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline eXtensible Business Reporting Language (Inline XBRL): (i) Condensed Consolidated Statements of Income for the second quarter and six months ended June 30, 2022 and 2021 (ii) Condensed Consolidated Statements of Comprehensive Income/(Loss) for the second quarter and six months ended June 30, 2022 and 2021, (iii) Condensed Consolidated Balance Sheets as of June 30, 2022, and December 31, 2021, (iv) Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2022 and 2021, and (v) Notes to Condensed Consolidated Financial Statements (filed herewith) | | 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		FRANKLIN ELECTRIC CO., INC.
		Registrant
Date: August 2, 2022	By	/s/ Gregg C. Sengstack
		Gregg C. Sengstack, Chairperson and Chief Executive Officer
		(Principal Executive Officer)
Date: August 2, 2022	By	/s/ Jeffery L. Taylor
		Jeffery L. Taylor, Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

36

Document

EXHIBIT 10.1

EMPLOYMENT SECURITY AGREEMENT

This Employment Security Agreement (“Agreement”), entered into as of the 6th day of May, 2022, by and between Franklin Electric Co., Inc., an Indiana corporation (“Franklin”), and Kenneth Keene (“Executive”).

WITNESSETH:

WHEREAS, Executive is currently employed by Franklin as the Vice President, Global Supply Chain;

WHEREAS, Franklin desires to provide certain security to Executive in connection with Executive’s employment with Franklin; and

WHEREAS, Executive and Franklin desire to enter into this Agreement pertaining to the terms of the security Franklin is providing to Executive with respect to his employment.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1.Definitions. For purposes of this Agreement:

a.“Affiliate” has the meaning set forth in Rule 12b-2 under the Securities Exchange Act of 1934.

b.“Base Salary” means Executive’s annual base salary at the rate in effect on the date of a Change in Control, or if greater, the rate in effect immediately prior to Executive’s termination of employment with Franklin.

c.“Change in Control” means the occurrence of any of the following events:

i.any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity (other than Franklin or a trustee or other fiduciary holding securities under an employee benefit plan of Franklin), or any syndicate or group deemed to be a person under Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of Franklin representing 20% or more of the combined voting power of Franklin’s then outstanding securities entitled to vote generally in the election of directors;

ii.Franklin is party to a merger, consolidation, reorganization or other similar transaction with another corporation or other legal person unless, following such transaction, more than 50% of the combined voting power of the outstanding securities of the surviving, resulting or acquiring corporation or person or its parent entity entitled to vote generally in the election of directors (or persons performing similar functions) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of Franklin’s outstanding securities entitled to vote generally in the election of directors immediately prior to such transaction, in substantially the same proportions as their ownership, immediately prior to such transaction, of Franklin’s outstanding securities entitled to vote generally in the election of directors;

iii.The stockholders of Franklin approve a plan of complete liquidation or dissolution of Franklin or Franklin sells all or substantially all of its business and/or assets to another corporation or other legal person unless, following such sale, more than 50% of the combined voting power of the outstanding securities of the acquiring corporation or person or its parent entity entitled to vote generally in the election of directors (or persons performing similar functions) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of Franklin’s outstanding securities entitled to vote generally in the election of directors immediately prior to such sale, in substantially the same proportions as their ownership, immediately prior to such sale, of Franklin’s outstanding securities entitled to vote generally in the election of directors; or

iv.during any period of two consecutive years or less, individuals who at the beginning of such period constituted the Board of Directors of Franklin (and any new Directors, whose appointment or election by the Board of Directors or nomination for election by Franklin’s stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the period or whose appointment, election or nomination for election was so approved) cease for any reason to constitute a majority of the Board of Directors.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur by virtue of any transaction in which Executive is a participant in a group effecting an acquisition of Franklin if Executive holds an equity interest in the entity acquiring Franklin at the time of such acquisition.

a.“Good Cause” means:

i.Executive’s intentional and material misappropriation of, or damage to, the property or business of Franklin;

ii.Executive’s conviction of a criminal violation involving fraud or dishonesty or of a felony that causes material harm or injury (whether financial or otherwise) to Franklin; or

iii.Executive’s willful and continuous failure to perform his obligations under the Agreement, provided that Franklin shall first give written notice to Executive describing such failure and, as long as it is capable of being cured and does not involve acts of material dishonesty directed against Franklin, Executive does not substantially cure or correct such failure within 30 days thereafter, or if such failure can not reasonably be cured within such period, cure is not commenced within such period and diligently pursued and fully cured within 60 days of Franklin’s original notice to Executive.

Notwithstanding anything herein to the contrary, in the event Franklin terminates the employment of Executive for Good Cause hereunder, Franklin shall give Executive at least 30 days prior written notice specifying in detail the reason or reasons for Executive’s termination.

a.“Good Reason” means:

i.a material reduction in Executive’s salary or retirement benefits or a material reduction in Executive’s compensation and benefits in the aggregate, excluding, in the case of incentive benefits that are based upon the performance of Executive or Franklin, reductions in benefits resulting from diminished performance by Executive or Franklin;

ii.any purchaser (or affiliate thereof) who purchases substantially all of the assets of Franklin shall decline to assume all of Franklin’s obligations under this Agreement; or

iii.the relocation of the Executive’s principal place of employment by more than 50 miles.

a.“Severance Period” means the period beginning on the date Executive’s employment with Franklin terminates under circumstances described in Section 2 and ending on the date 24 months thereafter.

b.“Target Bonus” means the amount that would be payable to Executive under the Executive Officer Annual Incentive Cash Bonus Program or any successor plan thereto for the year in which Executive’s employment with Franklin terminates, assuming attainment of the target performance goals at 100% level and employment of Executive at the end of such year (such amount to be determined regardless of whether Executive would otherwise be eligible for a bonus under the terms of any such plan or the extent to which the performance goals are actually met).

2.Termination of Employment. If within two years after a Change in Control, (a) Franklin terminates Executive’s employment for any reason other than Good Cause, or (b) Executive terminates his employment with Franklin for Good Reason, Franklin shall make the payments and provide the benefits described in Section 3 below.

3.Benefits Upon Termination of Employment. Upon termination of Executive’s employment with Franklin under circumstances described in Section 2 above:

a.Within 30 days following the date of such termination, Franklin shall pay Executive a lump sum cash payment equal to the sum of (i), (ii) and (iii) below:

i. unpaid Base Salary earned by Executive through the date of termination (which shall include payment for all accrued but unused vacation pay);

ii.two times Executive’s Base Salary; and

iii.an amount equal to the sum of (A) a prorata portion of Executive’s Target Bonus (based on the date on which such termination of employment occurs), and (B) two times Executive’s Target Bonus.

a.Franklin shall pay Executive a lump sum payment (calculated based on his age as of his termination of employment) within 30 days following his termination of employment of an amount equal to the increase in benefits under all tax-qualified and supplemental retirement plans maintained by Franklin in which Executive participates at termination of employment that results from crediting Executive with an additional 24 months of service for all purposes (including determining service and age for early retirement factors, if applicable) under such plans, and deeming Executive to be an employee of Franklin during the Severance Period. The amounts attributable to additional benefits under any such plan shall be based on Executive’s compensation level as of his termination of employment. The amounts attributable to additional benefits under any retirement plan that is a defined contribution plan shall include the additional Franklin contributions that would have been made or credited on Executive’s behalf had he authorized the same elective contributions he had elected for the year in which the termination of employment occurs, and shall include earnings that would have accrued under the applicable plan during the Severance Period (the earnings will be determined by multiplying the aggregate contributions to each such plan by the weighted average of the rate of return of the actual investment alternatives elected by Executive as of the beginning of the 12-month period ending on the employment termination date). Benefits accrued under such plans prior to Executive’s termination of employment shall be paid in accordance with the terms of such plans. Notwithstanding the foregoing, the payment under this Section 3(b) shall be offset by the lump sum value of the amounts of additional benefits paid or payable in accordance with the terms of such plans as a result of the occurrence of a Change in Control but not below zero.

b.If Executive holds any stock-based awards as of the date of his termination of employment, (i) all such awards that are stock options shall immediately become exercisable on such date and shall be exercisable for 12 months following such termination of employment, or if earlier, until the expiration of the term of the stock option; (ii) all restrictions on any awards of restricted stock or restricted stock units shall terminate or lapse; and (iii) all performance goals applicable to any performance-based awards shall be deemed satisfied at the target performance level, and in each case settlement of such awards shall be made to Executive within 30 days of Executive’s termination. To the extent any of the foregoing is not permissible under the terms of any plan pursuant to which the awards were granted, Franklin shall pay to Executive, in a lump sum within 30 days after termination of Executive’s employment, an amount as follows: (A) to the extent the acceleration of the exercise of such stock options is not permissible, an amount equal to the excess, if any, of the aggregate fair market value of the stock subject to such options, determined on the date of Executive’s termination of employment, over the aggregate exercise price of such stock options; (B) to the extent the termination or lapse of restrictions on restricted stock or restricted stock units is not permissible, an amount equal to the aggregate fair market value of the stock subject to the restrictions (determined without regard to such restrictions); and (C) to the extent performance awards are limited, an amount equal to the aggregate fair market value of the additional shares that were not awarded. Executive shall surrender all outstanding awards for which payment pursuant to the preceding sentence is made.

c.During the Severance Period, Executive and his spouse and eligible dependents shall continue to be covered by all employee benefit plans of Franklin providing health, prescription drug, dental, vision, disability and life insurance in which he or his spouse or eligible dependents were participating immediately prior to the date of his termination of employment, as if he continued to be an active employee of Franklin, and Franklin shall continue to pay the costs of such coverage under such plans on the same basis as is applicable to active employees covered thereunder; provided that, if participation in any one or more of such plans is not possible under the terms thereof, Franklin shall provide substantially identical benefits. The date of Executive’s termination of employment shall be considered a “qualifying event” as such term is defined in Title I, Part 6 of the Employee Retirement Income Security Act of 1974 (“COBRA”), and any continued coverage by Executive, his spouse or eligible dependents under Franklin’s group health plan after Executive’s termination of employment shall be considered COBRA coverage.

d.During the Severance Period, Executive will receive 12 months of executive outplacement services (not to exceed $50,000) with a professional outplacement firm selected by Franklin.

e.If at the time of Executive’s termination of employment for reasons other than death he is a “Key Employee” as determined in accordance with the procedures set forth in Treas. Reg. §1.409A-1(i), any amounts payable to Executive pursuant to this Agreement that are subject to Section 409A of the Internal Revenue Code shall not be paid or commence to be paid until six months following Executive’s termination of employment, or if earlier, Executive’s subsequent death, with the first payment to include the payments that otherwise would have been made during such period and including interest accruing thereon from the first day of the month following the date of such termination of employment until the date of payment, based on the applicable interest rate as defined in Section 417(e)(3) of the Internal Revenue Code. Each payment made pursuant to Section 3 shall be considered a separate payment for purposes of Section 409A.

4.Release of Claims. Payment by Franklin of the termination benefits provided in Section 3 hereof shall be conditioned on Executive’s execution, and nonrevocation, of a release of claims. Payment of such termination benefits shall be delayed until the expiration of the revocation period applicable to the executed release of claims, provided that if Executive does not execute the release of claims within 60 days of the date of termination of employment, the termination benefits

described in Section shall be forfeited and Executive shall be entitled to receive only the benefits to which he is otherwise entitled under applicable law.

5.Death. If Executive dies during the Severance Period, all amounts payable hereunder to Executive, to the extent not paid, shall be paid, within 30 days of the date of Executive’s death, to his surviving spouse or his designated beneficiary, or if none, then to his estate. Executive’s surviving spouse and eligible dependents shall continue to be covered under plans described in Section 3(d) during the remainder of the Severance Period. On the death of the surviving spouse and eligible dependents, no further coverage under such plans shall be provided (other than any coverage required pursuant to COBRA).

6.Excise Tax.

a.If in connection with the Change in Control or other event Executive would be or is subject to an excise tax under Section 4999 of the Internal Revenue Code (an “Excise Tax”) with respect to any cash, benefits or other property received, or any acceleration of vesting of any benefit or award (the “Change in Control Benefits”), Executive may elect to have the Change in Control Benefits otherwise payable under this Agreement reduced to the largest amount payable without resulting in the imposition of such Excise Tax. Within 15 days after the occurrence of the event that triggers the Excise Tax, a nationally recognized accounting firm selected by Franklin shall make a determination as to whether any Excise Tax would be reported with respect to the Change in Control Benefits and, if so, the amount of the Excise Tax, the total net after-tax amount of the Change in Control Benefits (after taking into account federal, state and local income and employment taxes and the Excise Tax) and the amount of reduction to the Change in Control Benefits necessary to avoid such Excise Tax. Any reduction to the Change in Control Benefits shall first be made from any cash benefits payable pursuant to this Agreement, if any, and thereafter, as determined by Executive, and Franklin shall provide Executive with such information as is necessary to make such determination. Franklin shall be responsible for all fees and expenses connected with the determinations by the accounting firm pursuant to this paragraph 6.

b.Executive agrees to notify Franklin in the event of any audit or other proceeding by the IRS or any taxing authority in which the IRS or other taxing authority asserts that any Excise Tax should be assessed against Executive and to cooperate with Franklin in contesting any such proposed assessment with respect to such Excise Tax (a “Proposed Assessment”). Executive agrees not to settle any Proposed Assessment without the consent of Franklin. If Franklin does not consent to allow Executive to settle the Proposed Assessment, within 30 days following such demand therefor, Franklin shall indemnify and hold harmless Executive with respect to any additional taxes, interest and/or penalties that Executive is required to pay by reason of the delay in finally resolving Executive’s tax liability (such indemnification to be made as soon as practicable, but in no event later than the end of the calendar year following the calendar year in which Executive makes such remittance).

7.Indemnification. Franklin shall indemnify, protect, defend and hold harmless Executive from and against all liabilities, costs and expenses (including but not limited to attorneys’ fees) incurred as a result of Executive’s employment with Franklin to the fullest extent permitted by the Indiana Business Corporation Law.

8.Litigation Expenses. Franklin shall reimburse Executive all out-of-pocket expenses, including attorneys’ fees, incurred by Executive in connection with any enforcement, claim or legal action or proceeding involving this Agreement, whether brought by Executive or by or on behalf of Franklin or by another party. Such reimbursement shall be made within 30 days of Executive’s submission of an invoice following resolution of the claim. Franklin shall pay prejudgment interest on any money judgment obtained by Executive, calculated at the published prime interest rate charged by Franklin’s principal banking connection from the date that payment(s) to him should have been made under this Agreement.

9.Post-Termination Payment Obligations. Subject to Section 4, Franklin's obligation to pay Executive the compensation and to make the other arrangements provided herein to be paid and made after termination of Executive's employment with Franklin shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right that Franklin may have against him or anyone else. All amounts so payable by Franklin shall be paid without notice or demand. Each and every such payment made by Franklin shall be final and Franklin will not seek to recover all or any part of such payment from Executive or from whomsoever may be entitled thereto, for any reason whatsoever.

10.Disclosure Of Confidential Information. Without the consent of Franklin, Executive shall not at any time divulge, furnish or make accessible to anyone (other than in the regular course of business of Franklin) any knowledge or information with respect to confidential or secret processes, inventions, formulae, machinery, plan, devices or materials of Franklin or with respect to any confidential or secret engineering development or research work of Franklin or with respect to any other confidential or secret aspect of the business of Franklin. Executive recognizes that irreparable injury will result to Franklin and its business and properties, in the event of any breach by Executive of any of the provisions of this Section 10. In the event of any breach of any of the commitments of Executive pursuant to this Section 10, Franklin shall be entitled, in

addition to any other remedies and damages available, to injunctive relief to restrain the violation of such commitments by Executive or by any person or persons acting for or with Executive in any capacity whatsoever.

11.Solicitation Of Employees. During Executive’s employment with Franklin and for a period of 18 months after termination of employment, Executive shall not (a) directly or indirectly, employ or retain or solicit for employment or arrange to have any other person, firm or other entity employ or retain or solicit for employment or otherwise participate in the employment or retention of any person who is an employee of Franklin or (b) encourage or solicit any such employee to leave the service of Franklin. Executive also acknowledges and agrees that he shall comply with the terms of the Confidentiality and Non-Compete Agreement in effect between him and Franklin. Executive and Franklin agree that of the amount paid to Executive pursuant to Section 3 of this Agreement, a portion equal to one times Executive’s Base Salary and one times the Target Bonus paid or payable to Executive pursuant to subparagraph 3(c) shall serve as adequate consideration for the restrictive covenants set forth in this Section 11.

12.Executive Assignment. No interest of Executive or his spouse or any other beneficiary under this Agreement, or any right to receive any payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligations or debts of, or other claims against, Executive or his spouse or other beneficiary, by operation of law or otherwise, other than pursuant to the terms of a qualified domestic relations order to which Executive is a party.

13.Reimbursements or In-Kind Benefits. Reimbursements or in-kind benefits provided under this Agreement that are subject to Section 409A of the Internal Revenue Code of 1986, as amended, are subject to the following restrictions: (a) the amount of expenses eligible for reimbursements, or in-kind benefits provided, to Executive during a calendar year shall not affect the expenses eligible for reimbursement or the in-kind benefits provided in any other calendar year, and (b) reimbursement of an eligible expense shall be made as soon as practicable, but in no event later than the last day of the calendar year following the calendar year in which the expense was incurred.

14.Waiver, Modification. No provisions of this Agreement may be waived, modified or discharged unless such waiver, modification or discharge is agreed to in a writing signed by Executive and Franklin. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time.

15.Applicable Law. This Agreement shall be construed and interpreted pursuant to the laws of Indiana.

16.Entire Agreement. This Agreement contains the entire Agreement between Franklin and Executive and supersedes any and all previous agreements, written or oral, between the parties relating to severance benefits, including any previous employment agreement or employment security agreement between Executive and Franklin. No amendment or modification of the terms of this Agreement shall be binding upon the parties hereto unless reduced to writing and signed by Franklin and Executive.

17.Severability. If any provision of this Agreement or the application thereof is held invalid, such invalidity shall not affect other provisions or applications of this Agreement that can be given effect without the invalid provision or application and, to such end, the provisions of this Agreement are declared to be severable.

18.No Employment Contract. Nothing contained in this Agreement shall be construed to be an employment contract between Executive and Franklin. Executive is employed at will and Franklin may terminate his employment at any time, with or without cause.

19.Employment with an Affiliate. If Executive is employed by Franklin and an Affiliate, or solely by an Affiliate, on the date of termination of employment of Executive under circumstances described in Section 2, then (a) employment or termination of employment as used in this Agreement shall mean employment or termination of employment of Executive with Franklin and such Affiliate, or with such Affiliate, as applicable, and related references to Franklin shall also include Affiliate, as applicable, and (b) the obligations of Franklin hereunder shall be satisfied by Franklin and/or such Affiliate as Franklin, in its discretion, shall determine; provided that Franklin shall remain liable for such obligations to the extent not satisfied by such Affiliate.

20.Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, representatives and successors. Any reference in this Agreement to Franklin shall be deemed a reference to any successor (whether direct or indirect, by purchase of stock or assets, merger or consolidation or otherwise) to all or substantially all of the business and/or assets of Franklin; provided that Executive’s employment by a successor shall not be deemed a termination of Executive’s employment with Franklin.

21.Withholding. Franklin may withhold from any payment that it is required to make under this Agreement amounts sufficient to satisfy applicable withholding requirements under any federal, state, or local law.

22.Headings. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement.

23.Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received or, if mailed, two days after mailing by United States registered or certified mail, return receipt requested, postage prepaid and addressed as herein provided. Notice to Franklin shall be addressed to Corporate Secretary, Franklin Electric Co., Inc. at 9255 Coverdale Road, Fort Wayne, Indiana 46809. Notices to Executive shall be addressed to Executive at his last permanent address as shown on Franklin's records. Notwithstanding the foregoing, if either party shall designate a different address by notice to the other party given in the foregoing manner, then notices to such party shall be addressed as designated until the designation is revoked by further notice given in such manner.

24.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.

IN WITNESS WHEREOF, the parties have executed this Employment Security Agreement as of the day and year written above.

FRANKLIN ELECTRIC CO., INC.
/s/ Jonathan M. Grandon
Jonathan M. Grandon
General Counsel
EXECUTIVE
/s/ Kenneth Keene
Kenneth Keene

Document

EXHIBIT 10.2

EMPLOYMENT SECURITY AGREEMENT

This Employment Security Agreement (“Agreement”), entered into as of the 6th day of May, 2022, by and between Franklin Electric Co., Inc., an Indiana corporation (“Franklin”), and Brent Spikes (“Executive”).

WITNESSETH:

WHEREAS, Executive is currently employed by Franklin as the Vice President, Global Manufacturing Operations;

WHEREAS, Franklin desires to provide certain security to Executive in connection with Executive’s employment with Franklin; and

WHEREAS, Executive and Franklin desire to enter into this Agreement pertaining to the terms of the security Franklin is providing to Executive with respect to his employment.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1.Definitions. For purposes of this Agreement:

a.“Affiliate” has the meaning set forth in Rule 12b-2 under the Securities Exchange Act of 1934.

b.“Base Salary” means Executive’s annual base salary at the rate in effect on the date of a Change in Control, or if greater, the rate in effect immediately prior to Executive’s termination of employment with Franklin.

c.“Change in Control” means the occurrence of any of the following events:

i.any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity (other than Franklin or a trustee or other fiduciary holding securities under an employee benefit plan of Franklin), or any syndicate or group deemed to be a person under Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of Franklin representing 20% or more of the combined voting power of Franklin’s then outstanding securities entitled to vote generally in the election of directors;

ii.Franklin is party to a merger, consolidation, reorganization or other similar transaction with another corporation or other legal person unless, following such transaction, more than 50% of the combined voting power of the outstanding securities of the surviving, resulting or acquiring corporation or person or its parent entity entitled to vote generally in the election of directors (or persons performing similar functions) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of Franklin’s outstanding securities entitled to vote generally in the election of directors immediately prior to such transaction, in substantially the same proportions as their ownership, immediately prior to such transaction, of Franklin’s outstanding securities entitled to vote generally in the election of directors;

iii.The stockholders of Franklin approve a plan of complete liquidation or dissolution of Franklin or Franklin sells all or substantially all of its business and/or assets to another corporation or other legal person unless, following such sale, more than 50% of the combined voting power of the outstanding securities of the acquiring corporation or person or its parent entity entitled to vote generally in the election of directors (or persons performing similar functions) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of Franklin’s outstanding securities entitled to vote generally in the election of directors immediately prior to such sale, in substantially the same proportions as their ownership, immediately prior to such sale, of Franklin’s outstanding securities entitled to vote generally in the election of directors; or

iv.during any period of two consecutive years or less, individuals who at the beginning of such period constituted the Board of Directors of Franklin (and any new Directors, whose appointment or election by the Board of Directors or nomination for election by Franklin’s stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the period or whose appointment, election or nomination for election was so approved) cease for any reason to constitute a majority of the Board of Directors.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur by virtue of any transaction in which Executive is a participant in a group effecting an acquisition of Franklin if Executive holds an equity interest in the entity acquiring Franklin at the time of such acquisition.

a.“Good Cause” means:

i.Executive’s intentional and material misappropriation of, or damage to, the property or business of Franklin;

ii.Executive’s conviction of a criminal violation involving fraud or dishonesty or of a felony that causes material harm or injury (whether financial or otherwise) to Franklin; or

iii.Executive’s willful and continuous failure to perform his obligations under the Agreement, provided that Franklin shall first give written notice to Executive describing such failure and, as long as it is capable of being cured and does not involve acts of material dishonesty directed against Franklin, Executive does not substantially cure or correct such failure within 30 days thereafter, or if such failure can not reasonably be cured within such period, cure is not commenced within such period and diligently pursued and fully cured within 60 days of Franklin’s original notice to Executive.

Notwithstanding anything herein to the contrary, in the event Franklin terminates the employment of Executive for Good Cause hereunder, Franklin shall give Executive at least 30 days prior written notice specifying in detail the reason or reasons for Executive’s termination.

a.“Good Reason” means:

i.a material reduction in Executive’s salary or retirement benefits or a material reduction in Executive’s compensation and benefits in the aggregate, excluding, in the case of incentive benefits that are based upon the performance of Executive or Franklin, reductions in benefits resulting from diminished performance by Executive or Franklin;

ii.any purchaser (or affiliate thereof) who purchases substantially all of the assets of Franklin shall decline to assume all of Franklin’s obligations under this Agreement; or

iii.the relocation of the Executive’s principal place of employment by more than 50 miles.

a.“Severance Period” means the period beginning on the date Executive’s employment with Franklin terminates under circumstances described in Section 2 and ending on the date 24 months thereafter.

b.“Target Bonus” means the amount that would be payable to Executive under the Executive Officer Annual Incentive Cash Bonus Program or any successor plan thereto for the year in which Executive’s employment with Franklin terminates, assuming attainment of the target performance goals at 100% level and employment of Executive at the end of such year (such amount to be determined regardless of whether Executive would otherwise be eligible for a bonus under the terms of any such plan or the extent to which the performance goals are actually met).

2.Termination of Employment. If within two years after a Change in Control, (a) Franklin terminates Executive’s employment for any reason other than Good Cause, or (b) Executive terminates his employment with Franklin for Good Reason, Franklin shall make the payments and provide the benefits described in Section 3 below.

3.Benefits Upon Termination of Employment. Upon termination of Executive’s employment with Franklin under circumstances described in Section 2 above:

a.Within 30 days following the date of such termination, Franklin shall pay Executive a lump sum cash payment equal to the sum of (i), (ii) and (iii) below:

i. unpaid Base Salary earned by Executive through the date of termination (which shall include payment for all accrued but unused vacation pay);

ii.two times Executive’s Base Salary; and

iii.an amount equal to the sum of (A) a prorata portion of Executive’s Target Bonus (based on the date on which such termination of employment occurs), and (B) two times Executive’s Target Bonus.

a.Franklin shall pay Executive a lump sum payment (calculated based on his age as of his termination of employment) within 30 days following his termination of employment of an amount equal to the increase in benefits under all tax-qualified and supplemental retirement plans maintained by Franklin in which Executive participates at termination of employment that results from crediting Executive with an additional 24 months of service for all purposes (including determining service and age for early retirement factors, if applicable) under such plans, and deeming Executive to be an employee of Franklin during the Severance Period. The amounts attributable to additional benefits under any such plan shall be based on Executive’s compensation level as of his termination of employment. The amounts attributable to additional benefits under any retirement plan that is a defined contribution plan shall include the additional Franklin contributions that would have been made or credited on Executive’s behalf had he authorized the same elective contributions he had elected for the year in which the termination of employment occurs, and shall include earnings that would have accrued under the applicable plan during the Severance Period (the earnings will be determined by multiplying the aggregate contributions to each such plan by the weighted average of the rate of return of the actual investment alternatives elected by Executive as of the beginning of the 12-month period ending on the employment termination date). Benefits accrued under such plans prior to Executive’s termination of employment shall be paid in accordance with the terms of such plans. Notwithstanding the foregoing, the payment under this Section 3(b) shall be offset by the lump sum value of the amounts of additional benefits paid or payable in accordance with the terms of such plans as a result of the occurrence of a Change in Control but not below zero.

b.If Executive holds any stock-based awards as of the date of his termination of employment, (i) all such awards that are stock options shall immediately become exercisable on such date and shall be exercisable for 12 months following such termination of employment, or if earlier, until the expiration of the term of the stock option; (ii) all restrictions on any awards of restricted stock or restricted stock units shall terminate or lapse; and (iii) all performance goals applicable to any performance-based awards shall be deemed satisfied at the target performance level, and in each case settlement of such awards shall be made to Executive within 30 days of Executive’s termination. To the extent any of the foregoing is not permissible under the terms of any plan pursuant to which the awards were granted, Franklin shall pay to Executive, in a lump sum within 30 days after termination of Executive’s employment, an amount as follows: (A) to the extent the acceleration of the exercise of such stock options is not permissible, an amount equal to the excess, if any, of the aggregate fair market value of the stock subject to such options, determined on the date of Executive’s termination of employment, over the aggregate exercise price of such stock options; (B) to the extent the termination or lapse of restrictions on restricted stock or restricted stock units is not permissible, an amount equal to the aggregate fair market value of the stock subject to the restrictions (determined without regard to such restrictions); and (C) to the extent performance awards are limited, an amount equal to the aggregate fair market value of the additional shares that were not awarded. Executive shall surrender all outstanding awards for which payment pursuant to the preceding sentence is made.

c.During the Severance Period, Executive and his spouse and eligible dependents shall continue to be covered by all employee benefit plans of Franklin providing health, prescription drug, dental, vision, disability and life insurance in which he or his spouse or eligible dependents were participating immediately prior to the date of his termination of employment, as if he continued to be an active employee of Franklin, and Franklin shall continue to pay the costs of such coverage under such plans on the same basis as is applicable to active employees covered thereunder; provided that, if participation in any one or more of such plans is not possible under the terms thereof, Franklin shall provide substantially identical benefits. The date of Executive’s termination of employment shall be considered a “qualifying event” as such term is defined in Title I, Part 6 of the Employee Retirement Income Security Act of 1974 (“COBRA”), and any continued coverage by Executive, his spouse or eligible dependents under Franklin’s group health plan after Executive’s termination of employment shall be considered COBRA coverage.

d.During the Severance Period, Executive will receive 12 months of executive outplacement services (not to exceed $50,000) with a professional outplacement firm selected by Franklin.

e.If at the time of Executive’s termination of employment for reasons other than death he is a “Key Employee” as determined in accordance with the procedures set forth in Treas. Reg. §1.409A-1(i), any amounts payable to Executive pursuant to this Agreement that are subject to Section 409A of the Internal Revenue Code shall not be paid or commence to be paid until six months following Executive’s termination of employment, or if earlier, Executive’s subsequent death, with the first payment to include the payments that otherwise would have been made during such period and including interest accruing thereon from the first day of the month following the date of such termination of employment until the date of payment, based on the applicable interest rate as defined in Section 417(e)(3) of the Internal Revenue Code. Each payment made pursuant to Section 3 shall be considered a separate payment for purposes of Section 409A.

4.Release of Claims. Payment by Franklin of the termination benefits provided in Section 3 hereof shall be conditioned on Executive’s execution, and nonrevocation, of a release of claims. Payment of such termination benefits shall be delayed until the expiration of the revocation period applicable to the executed release of claims, provided that if Executive does not execute the release of claims within 60 days of the date of termination of employment, the termination benefits

described in Section shall be forfeited and Executive shall be entitled to receive only the benefits to which he is otherwise entitled under applicable law.

5.Death. If Executive dies during the Severance Period, all amounts payable hereunder to Executive, to the extent not paid, shall be paid, within 30 days of the date of Executive’s death, to his surviving spouse or his designated beneficiary, or if none, then to his estate. Executive’s surviving spouse and eligible dependents shall continue to be covered under plans described in Section 3(d) during the remainder of the Severance Period. On the death of the surviving spouse and eligible dependents, no further coverage under such plans shall be provided (other than any coverage required pursuant to COBRA).

6.Excise Tax.

a.If in connection with the Change in Control or other event Executive would be or is subject to an excise tax under Section 4999 of the Internal Revenue Code (an “Excise Tax”) with respect to any cash, benefits or other property received, or any acceleration of vesting of any benefit or award (the “Change in Control Benefits”), Executive may elect to have the Change in Control Benefits otherwise payable under this Agreement reduced to the largest amount payable without resulting in the imposition of such Excise Tax. Within 15 days after the occurrence of the event that triggers the Excise Tax, a nationally recognized accounting firm selected by Franklin shall make a determination as to whether any Excise Tax would be reported with respect to the Change in Control Benefits and, if so, the amount of the Excise Tax, the total net after-tax amount of the Change in Control Benefits (after taking into account federal, state and local income and employment taxes and the Excise Tax) and the amount of reduction to the Change in Control Benefits necessary to avoid such Excise Tax. Any reduction to the Change in Control Benefits shall first be made from any cash benefits payable pursuant to this Agreement, if any, and thereafter, as determined by Executive, and Franklin shall provide Executive with such information as is necessary to make such determination. Franklin shall be responsible for all fees and expenses connected with the determinations by the accounting firm pursuant to this paragraph 6.

b.Executive agrees to notify Franklin in the event of any audit or other proceeding by the IRS or any taxing authority in which the IRS or other taxing authority asserts that any Excise Tax should be assessed against Executive and to cooperate with Franklin in contesting any such proposed assessment with respect to such Excise Tax (a “Proposed Assessment”). Executive agrees not to settle any Proposed Assessment without the consent of Franklin. If Franklin does not consent to allow Executive to settle the Proposed Assessment, within 30 days following such demand therefor, Franklin shall indemnify and hold harmless Executive with respect to any additional taxes, interest and/or penalties that Executive is required to pay by reason of the delay in finally resolving Executive’s tax liability (such indemnification to be made as soon as practicable, but in no event later than the end of the calendar year following the calendar year in which Executive makes such remittance).

7.Indemnification. Franklin shall indemnify, protect, defend and hold harmless Executive from and against all liabilities, costs and expenses (including but not limited to attorneys’ fees) incurred as a result of Executive’s employment with Franklin to the fullest extent permitted by the Indiana Business Corporation Law.

8.Litigation Expenses. Franklin shall reimburse Executive all out-of-pocket expenses, including attorneys’ fees, incurred by Executive in connection with any enforcement, claim or legal action or proceeding involving this Agreement, whether brought by Executive or by or on behalf of Franklin or by another party. Such reimbursement shall be made within 30 days of Executive’s submission of an invoice following resolution of the claim. Franklin shall pay prejudgment interest on any money judgment obtained by Executive, calculated at the published prime interest rate charged by Franklin’s principal banking connection from the date that payment(s) to him should have been made under this Agreement.

9.Post-Termination Payment Obligations. Subject to Section 4, Franklin's obligation to pay Executive the compensation and to make the other arrangements provided herein to be paid and made after termination of Executive's employment with Franklin shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right that Franklin may have against him or anyone else. All amounts so payable by Franklin shall be paid without notice or demand. Each and every such payment made by Franklin shall be final and Franklin will not seek to recover all or any part of such payment from Executive or from whomsoever may be entitled thereto, for any reason whatsoever.

10.Disclosure Of Confidential Information. Without the consent of Franklin, Executive shall not at any time divulge, furnish or make accessible to anyone (other than in the regular course of business of Franklin) any knowledge or information with respect to confidential or secret processes, inventions, formulae, machinery, plan, devices or materials of Franklin or with respect to any confidential or secret engineering development or research work of Franklin or with respect to any other confidential or secret aspect of the business of Franklin. Executive recognizes that irreparable injury will result to Franklin and its business and properties, in the event of any breach by Executive of any of the provisions of this Section 10. In the event of any breach of any of the commitments of Executive pursuant to this Section 10, Franklin shall be entitled, in

addition to any other remedies and damages available, to injunctive relief to restrain the violation of such commitments by Executive or by any person or persons acting for or with Executive in any capacity whatsoever.

11.Solicitation Of Employees. During Executive’s employment with Franklin and for a period of 18 months after termination of employment, Executive shall not (a) directly or indirectly, employ or retain or solicit for employment or arrange to have any other person, firm or other entity employ or retain or solicit for employment or otherwise participate in the employment or retention of any person who is an employee of Franklin or (b) encourage or solicit any such employee to leave the service of Franklin. Executive also acknowledges and agrees that he shall comply with the terms of the Confidentiality and Non-Compete Agreement in effect between him and Franklin. Executive and Franklin agree that of the amount paid to Executive pursuant to Section 3 of this Agreement, a portion equal to one times Executive’s Base Salary and one times the Target Bonus paid or payable to Executive pursuant to subparagraph 3(c) shall serve as adequate consideration for the restrictive covenants set forth in this Section 11.

12.Executive Assignment. No interest of Executive or his spouse or any other beneficiary under this Agreement, or any right to receive any payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligations or debts of, or other claims against, Executive or his spouse or other beneficiary, by operation of law or otherwise, other than pursuant to the terms of a qualified domestic relations order to which Executive is a party.

13.Reimbursements or In-Kind Benefits. Reimbursements or in-kind benefits provided under this Agreement that are subject to Section 409A of the Internal Revenue Code of 1986, as amended, are subject to the following restrictions: (a) the amount of expenses eligible for reimbursements, or in-kind benefits provided, to Executive during a calendar year shall not affect the expenses eligible for reimbursement or the in-kind benefits provided in any other calendar year, and (b) reimbursement of an eligible expense shall be made as soon as practicable, but in no event later than the last day of the calendar year following the calendar year in which the expense was incurred.

14.Waiver, Modification. No provisions of this Agreement may be waived, modified or discharged unless such waiver, modification or discharge is agreed to in a writing signed by Executive and Franklin. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time.

15.Applicable Law. This Agreement shall be construed and interpreted pursuant to the laws of Indiana.

16.Entire Agreement. This Agreement contains the entire Agreement between Franklin and Executive and supersedes any and all previous agreements, written or oral, between the parties relating to severance benefits, including any previous employment agreement or employment security agreement between Executive and Franklin. No amendment or modification of the terms of this Agreement shall be binding upon the parties hereto unless reduced to writing and signed by Franklin and Executive.

17.Severability. If any provision of this Agreement or the application thereof is held invalid, such invalidity shall not affect other provisions or applications of this Agreement that can be given effect without the invalid provision or application and, to such end, the provisions of this Agreement are declared to be severable.

18.No Employment Contract. Nothing contained in this Agreement shall be construed to be an employment contract between Executive and Franklin. Executive is employed at will and Franklin may terminate his employment at any time, with or without cause.

19.Employment with an Affiliate. If Executive is employed by Franklin and an Affiliate, or solely by an Affiliate, on the date of termination of employment of Executive under circumstances described in Section 2, then (a) employment or termination of employment as used in this Agreement shall mean employment or termination of employment of Executive with Franklin and such Affiliate, or with such Affiliate, as applicable, and related references to Franklin shall also include Affiliate, as applicable, and (b) the obligations of Franklin hereunder shall be satisfied by Franklin and/or such Affiliate as Franklin, in its discretion, shall determine; provided that Franklin shall remain liable for such obligations to the extent not satisfied by such Affiliate.

20.Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, representatives and successors. Any reference in this Agreement to Franklin shall be deemed a reference to any successor (whether direct or indirect, by purchase of stock or assets, merger or consolidation or otherwise) to all or substantially all of the business and/or assets of Franklin; provided that Executive’s employment by a successor shall not be deemed a termination of Executive’s employment with Franklin.

21.Withholding. Franklin may withhold from any payment that it is required to make under this Agreement amounts sufficient to satisfy applicable withholding requirements under any federal, state, or local law.

22.Headings. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement.

23.Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received or, if mailed, two days after mailing by United States registered or certified mail, return receipt requested, postage prepaid and addressed as herein provided. Notice to Franklin shall be addressed to Corporate Secretary, Franklin Electric Co., Inc. at 9255 Coverdale Road, Fort Wayne, Indiana 46809. Notices to Executive shall be addressed to Executive at his last permanent address as shown on Franklin's records. Notwithstanding the foregoing, if either party shall designate a different address by notice to the other party given in the foregoing manner, then notices to such party shall be addressed as designated until the designation is revoked by further notice given in such manner.

24.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.

IN WITNESS WHEREOF, the parties have executed this Employment Security Agreement as of the day and year written above.

FRANKLIN ELECTRIC CO., INC.
/s/ Jonathan M. Grandon
Jonathan M. Grandon
General Counsel
EXECUTIVE
/s/ Brent Spikes
Brent Spikes

Document

EXHIBIT 31.1

CERTIFICATIONS

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregg C. Sengstack, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric Co., Inc., for the second quarter ending June 30, 2022;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Franklin Electric Co., Inc. as of, and for, the periods presented in this report;

4.Franklin Electric Co., Inc.'s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Franklin Electric Co., Inc. and we have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Franklin Electric Co., Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of Franklin Electric Co., Inc.'s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any changes in Franklin Electric Co., Inc.'s internal control over financial reporting that occurred during Franklin Electric Co., Inc.'s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.Franklin Electric Co., Inc.'s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Franklin Electric Co., Inc.'s auditors and the audit committee of Franklin Electric Co., Inc.'s board of directors:

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Franklin Electric Co., Inc.'s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in Franklin Electric Co., Inc.'s internal control over financial reporting.

Date:	August 2, 2022
	/s/ Gregg C. Sengstack
	Gregg C. Sengstack
	Chairperson and Chief Executive Officer
	Franklin Electric Co., Inc.

Document

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffery L. Taylor, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Franklin Electric Co., Inc., for the second quarter ending June 30, 2022;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Franklin Electric Co., Inc. as of, and for, the periods presented in this report;

4.Franklin Electric Co., Inc.'s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Franklin Electric Co., Inc. and we have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Franklin Electric Co., Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of Franklin Electric Co., Inc.'s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in Franklin Electric Co., Inc.'s internal control over financial reporting that occurred during Franklin Electric Co., Inc.'s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, Franklin Electric Co., Inc.'s internal control over financial reporting; and

5.Franklin Electric Co., Inc.'s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Franklin Electric Co., Inc.'s auditors and the audit committee of Franklin Electric Co., Inc.'s board of directors:

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Franklin Electric Co., Inc.'s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in Franklin Electric Co., Inc.'s internal control over financial reporting.

Date:	August 2, 2022
	/s/ Jeffery L. Taylor
	Jeffery L. Taylor
	Vice President and Chief Financial Officer
	Franklin Electric Co., Inc.

Document

EXHIBIT 32.1

CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Franklin Electric Co., Inc. (the “Company”) on Form 10-Q for the second quarter ending June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregg C. Sengstack, Chairperson and Chief Executive Officer of the Company, certify to my knowledge, pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 2, 2022
	/s/ Gregg C. Sengstack
	Gregg C. Sengstack
	Chairperson and Chief Executive Officer
	Franklin Electric Co., Inc.

Document

EXHIBIT 32.2

CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Franklin Electric Co., Inc. (the “Company”) on Form 10-Q for the second quarter ending June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffery L. Taylor, Vice President and Chief Financial Officer of the Company, certify to my knowledge, pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 2, 2022
	/s/ Jeffery L. Taylor
	Jeffery L. Taylor
	Vice President and Chief Financial Officer
	Franklin Electric Co., Inc.