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Franklin Electric Co., Inc. (NASDAQ:FELE), a company with a market capitalization of $4.05 billion and a strong financial health rating according to InvestingPro, has finalized an amendment to its credit agreement, effectively extending the maturity date and maintaining its revolving commitment at $350 million, according to an 8-K filing with the Securities and Exchange Commission. The Fifth Amended and Restated Credit Agreement, dated May 14, 2025, involves Franklin Electric, its subsidiary Franklin Electric B.V., JPMorgan Chase (NYSE:JPM) Bank, N.A., as administrative agent, Bank of America, N.A., as Syndication Agent, and other identified lenders.
The new agreement extends the maturity of the company’s previous credit facility to May 14, 2030. It also includes an option for the borrowers to increase the revolving commitments by up to an additional $175 million, potentially reaching a total commitment of $525 million, subject to certain conditions. This move aligns with the company’s prudent financial management, as evidenced by its moderate debt level and strong current ratio of 1.98, indicating robust liquidity position.
This facility carries a commitment fee ranging from 0.100% to 0.250%, which is contingent upon the company’s leverage ratio and payable quarterly. The agreement also enforces financial covenants requiring a maximum leverage ratio of 3.50 to 1.00 and an interest coverage ratio of at least 3.00 to 1.00, along with a priority debt cap at 20% of total tangible assets.
The amended credit agreement contains both affirmative and negative covenants typical for such financial arrangements, including the provision of financial statements, compliance with laws, and restrictions on loans, investments, and asset transfers. InvestingPro analysis shows that Franklin Electric’s cash flows sufficiently cover interest payments, with a conservative debt-to-equity ratio of 0.17, suggesting effective debt management. For deeper insights into the company’s financial health metrics and detailed analysis, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In the event of default, the agreement stipulates that commitments may be terminated and outstanding loans may become due immediately. The agreement also allows for multicurrency loans and includes a swingline loan sub-facility of up to $15 million with an additional discretionary amount of up to $15 million, and a letter of credit sub-facility of up to $50 million.
Interest rates under this credit facility will be based on prevailing annual rates plus an applicable margin determined by the leverage ratio, and the agreement includes a competitive bid option for the interest rates on specific loans.
The filing indicates that the description of the Fifth Amended and Restated Credit Agreement is qualified in its entirety by reference to the full document, which is incorporated by reference to Exhibit 10.1 of the 8-K filing.
This financial move by Franklin Electric demonstrates the company’s ongoing efforts to maintain financial flexibility and support its operational and strategic initiatives. Based on current market analysis, InvestingPro data suggests the stock is trading near its Fair Value. The information reported is based on the company’s latest SEC filing and financial metrics.
In other recent news, Franklin Electric Co., Inc. reported its first-quarter 2025 earnings, revealing a shortfall in both earnings per share (EPS) and revenue compared to analyst expectations. The company posted an EPS of $0.67, missing the forecasted $0.76, while revenue came in at $455.2 million, below the expected $472.1 million. Despite these financial setbacks, Franklin Electric maintains its full-year sales guidance between $2.090 billion and $2.150 billion, with adjusted GAAP EPS guidance of $3.95 to $4.25. The company completed two strategic acquisitions in the first quarter, integrating new businesses into its portfolio to strengthen market positioning. Additionally, Franklin Electric announced key changes to its board of directors, with Jennifer L. Sherman appointed as the new Chairperson and Mark A. Carano joining as a board member. These developments reflect the company’s ongoing efforts to enhance leadership and drive strategic growth. Franklin Electric is also focusing on offsetting potential volume pressures with pricing strategies and is closely monitoring the tariff environment.
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