• Franklin Electric Reports Record Third Quarter 2021 Results

    المصدر: Nasdaq GlobeNewswire / 26 أكتوبر 2021 08:00:04   America/New_York

    Third Quarter 2021 Highlights

    • Record sales of $459.0 million, compared to third quarter 2020 sales of $351.2 million, an increase of 31%
    • Strong organic sales growth in all three Segments; Distribution 30%, Fueling Systems 18%, and Water Systems 11%
    • Operating income was $56.6 million, compared to third quarter operating income in 2020 of $48.4 million, an increase of 17%
    • GAAP fully diluted earnings per share (EPS) was $0.98, a record for any quarter
    • Working capital as a percent of trailing twelve months sales improved 150 basis points to 27.6%

    FORT WAYNE, Ind., Oct. 26, 2021 (GLOBE NEWSWIRE) -- Franklin Electric Co. Inc. today announced third quarter 2021 financial results.

    Third quarter 2021 sales were $459.0 million, compared to third quarter 2020 sales of $351.2 million. Third quarter 2021 operating income was $56.6 million, compared to third quarter operating income in 2020 of $48.4 million, an increase of 17 percent.

    Third quarter 2021 GAAP fully diluted earnings per share (EPS) was $0.98, versus GAAP fully diluted EPS in the third quarter 2020 of $0.82.

    “We continued to break records in the third quarter of 2021, as we once again delivered the highest consolidated net sales, operating income, and EPS for any quarter in Franklin’s history. Demand remains strong across the business, with notably strong performance in our Distribution business, which posted impressive year-over-year sales growth of 43 percent. At the same time, our Water Systems and Fueling Systems segments maintained a remarkable pace with sales growing 28 and 18 percent, respectively,” commented Gregg Sengstack, Franklin Electric’s Chairperson and Chief Executive Officer.

    “While supply chain challenges continue throughout the global economy, our team remains focused on managing these on-going challenges to meet our customers’ needs. The integration of recent acquisitions within Water Treatment continues to progress and offers a promising foundation to drive growth in our Global Water business. We look forward to capitalizing on sustained momentum in all of our business segments across the globe and drive value for our shareholders as we execute our strategic plan,” Mr. Sengstack concluded.

    Segment Summaries

    Water Systems sales, a new record for any quarter, were $260.7 million in the third quarter 2021, an increase of $57.8 million or 28 percent versus the third quarter 2020. Water Systems sales, excluding acquisitions and the impact of foreign currency translation, were up about 11 percent compared to the third quarter 2020. Sales of groundwater pumping equipment and sales of both surface pumping and dewatering equipment increased due to strong end market demand. Water Systems operating income in the third quarter was $36.8 million driven by higher sales. Third quarter 2020 Water Systems operating income was $36.6 million.

    Distribution sales, a new third quarter record, were $140.2 million in the third quarter 2021. The Distribution segment organic sales increased 30 percent compared to the third quarter of 2020. Revenue growth was driven by broad-based demand in all regions and product categories. The Distribution segment operating income was $12.3 million in the third quarter of 2021 compared to third quarter 2020 operating income of $6.4 million.

    Fueling Systems sales, a new record for any quarter, were $81.0 million in the third quarter 2021, an increase of $12.6 million versus the third quarter 2020. Fueling Systems sales in the U.S. and Canada increased by about 27 percent compared to the third quarter 2020. The increase was due to higher demand for Fuel Management and Pumping Systems and Piping. Outside the U.S. and Canada, Fueling Systems revenues decreased by about 1 percent, as sales increases of 11 percent in the rest of the world outside of China were offset by lower sales in China. Fueling Systems operating income in the third quarter was $23.9 million, compared to $18.9 million in the third quarter of 2020, driven by higher sales, as well as favorable geographic and product mix.

    Cash Flow

    Net cash flows from operating activities for the first nine months of 2021 were $93.9 million versus $133.7 million in the same period in 2020. The decrease was primarily due to higher working capital requirements in support of higher revenues.

    2021 Guidance

    The Company is raising our most recent full year 2021 earnings per share before restructuring expenses to be in the range from $2.99 to $3.07.

    Earnings Conference Call

    A conference call to review earnings and other developments in the business will commence at 9:00 am ET. The third quarter 2021 earnings call will be available via a live webcast. The webcast will be available in a listen only mode by going to:

    https://edge.media-server.com/mmc/p/g2j853js

    If you intend to ask questions during the call, please dial in using 877.643.7158 for domestic calls and 914.495.8565 for international calls. The conference ID is 6199466.

    A replay of the conference call will be available Tuesday, October 26, 2021, at 12:00 noon ET through noon ET on Tuesday, November 2, 2021, by dialing 855.859.2056 for domestic calls and 404.537.3406 for international calls. The replay passcode is 6199466.

    Forward Looking Statements

    "Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including those relating to market conditions or the Company’s financial results, costs, expenses or expense reductions, profit margins, inventory levels, foreign currency translation rates, liquidity expectations, business goals and sales growth, involve risks and uncertainties, including but not limited to, risks and uncertainties with respect to general economic and currency conditions, various conditions specific to the Company’s business and industry, weather conditions, new housing starts, market demand, competitive factors, changes in distribution channels, supply constraints, effect of price increases, raw material costs, technology factors, integration of acquisitions, litigation, government and regulatory actions, the Company’s accounting policies, future trends, epidemics and pandemics, and other risks which are detailed in the Company’s Securities and Exchange Commission filings, included in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2020, Exhibit 99.1 attached thereto and in Item 1A of Part II of the Company’s Quarterly Reports on Form 10-Q. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and the Company assumes no obligation to update any forward-looking statements.

    About Franklin Electric

    Franklin Electric is a global leader in the production and marketing of systems and components for the movement of water and fuel. Recognized as a technical leader in its products and services, Franklin Electric serves customers around the world in residential, commercial, agricultural, industrial, municipal, and fueling applications.

    Franklin Electric Contact:

    Jeffery L. Taylor
    Franklin Electric Co., Inc.
    260-824-2900
    Email: jeffery.taylor@fele.com


     
    FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited)
            
    (In thousands, except per share amounts)       
            
     Third Quarter Ended Nine Months Ended
     September 30, September 30, September 30, September 30,
     2021 2020 2021 2020
            
    Net sales$459,019  $351,190  $1,229,345  $926,225 
            
    Cost of sales 295,903   226,893   798,444   604,489 
            
    Gross profit 163,116   124,297   430,901   321,736 
            
    Selling, general, and administrative expenses 106,446   75,472   288,534   223,409 
            
    Restructuring expense 76   441   381   2,189 
            
    Operating income 56,594   48,384   141,986   96,138 
      
    Interest expense (1,384)  (1,130)  (3,840)  (3,496)
    Other income/(expense), net 2,061   (463)  1,531   (1,062)
    Foreign exchange income/(expense) (408)  (140)  (1,654)  (84)
            
    Income before income taxes 56,863   46,651   138,023   91,496 
            
    Income tax (benefit)/expense 10,409   8,076   24,043   17,327 
            
    Net income$46,454  $38,575  $113,980  $74,169 
            
    Less: Net income attributable to noncontrolling interests (282)  (203)  (787)  (503)
            
    Net income attributable to Franklin Electric Co., Inc.$46,172  $38,372  $113,193  $73,666 
            
    Income per share:       
    Basic$0.99  $0.82  $2.43  $1.58 
    Diluted$0.98  $0.82  $2.40  $1.57 
            


     
    FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)
        
    (In thousands)   
        
     September 30 December 31,
     2021 2020
    ASSETS   
        
    Cash and equivalents$75,952  $130,787 
    Receivables (net) 218,175   159,827 
    Inventories 395,531   300,932 
    Other current assets 38,472   27,708 
    Total current assets 728,130   619,254 
        
    Property, plant, and equipment, net 205,970   209,021 
    Right-of-use asset, net 36,181   31,954 
    Goodwill and other assets 575,700   412,078 
    Total assets$1,545,981  $1,272,307 
        
        
    LIABILITIES AND EQUITY   
        
    Accounts payable$163,941  $95,903 
    Accrued expenses and other current liabilities 118,999   94,160 
    Current lease liability 12,240   11,090 
    Current maturities of long-term debt and   
    short-term borrowings 106,293   2,551 
    Total current liabilities 401,473   203,704 
        
    Long-term debt 90,527   91,966 
    Long-term lease liability 24,087   20,866 
    Income taxes payable non-current 11,610   11,965 
    Deferred income taxes 27,540   25,671 
    Employee benefit plans 39,899   44,443 
    Other long-term liabilities 25,267   23,988 
     
    Redeemable noncontrolling interest (146)  (245)
        
    Total equity 925,724   849,949 
    Total liabilities and equity$1,545,981  $1,272,307 
        


     
    FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
     Nine Months Ended
    (In thousands)   
     September 30,September 30,
     2021 2020
    Cash flows from operating activities:   
    Net income$113,980  $74,169 
    Adjustments to reconcile net income to net   
    cash flows from operating activities:   
    Depreciation and amortization 32,767   26,917 
    Non-cash lease expense 9,394   8,478 
    Share-based compensation 8,921   8,312 
    Other 1,978   (622)
    Changes in assets and liabilities:   
    Receivables (57,434)  (5,147)
    Inventory (85,873)  4,322 
    Accounts payable and accrued expenses 92,214   26,069 
    Operating leases (9,394)  (8,478)
    Income taxes-U.S. Tax Cuts and Jobs Act (355)  - 
    Other (12,296)  (312)
        
    Net cash flows from operating activities 93,902   133,708 
        
    Cash flows from investing activities:   
    Additions to property, plant, and equipment (20,274)  (15,239)
    Proceeds from sale of property, plant, and equipment 839   28 
    Acquisitions and investments (193,987)  (6,089)
    Other investing activities 38   (74)
        
    Net cash flows from investing activities (213,384)  (21,374)
        
    Cash flows from financing activities:   
    Change in debt 102,395   (20,748)
    Proceeds from issuance of common stock 11,390   3,014 
    Purchases of common stock (21,138)  (19,091)
    Dividends paid (24,499)  (21,641)
        
    Net cash flows from financing activities 68,148   (58,466)
        
    Effect of exchange rate changes on cash (3,501)  (3,793)
    Net change in cash and equivalents (54,835)  50,075 
    Cash and equivalents at beginning of period 130,787   64,405 
    Cash and equivalents at end of period$75,952  $114,480 
        

    Key Performance Indicators: Earnings Per Share Calculations

     For the Third Quarter
    Earnings Before and After Restructuring20212020Change
    (in millions)   
    Net Income attributable to FE Co., Inc. Reported$ 46.2 $ 38.4 20%
    Allocated Earnings$(0.3)$(0.3) 
    Earnings for EPS Calculations$ 45.9 $ 38.1 20%
        
    Restructuring (before tax):$0.1 $0.4  
        
    Restructuring, net of tax:$0.1 $0.3  
        
    Earnings before Restructuring$ 46.0 $ 38.4 20%
        
     For the Third Quarter
    Earnings Per Share20212020Change
    Before and After Restructuring    
    (in millions except Earnings Per Share)   
        
    Average Fully Diluted Shares Outstanding 47.0  46.6 1%
        
    Fully Diluted Earnings Per Share ("EPS") Reported$ 0.98 $ 0.82 20%
        
    Restructuring Per Share, net of tax$- $0.01  
        
    Fully Diluted EPS before Restructuring$ 0.98 $ 0.83 18%
        

    Key Performance Indicators: Net Sales Summary

     Net Sales 
       
     United StatesLatinEurope, MiddleAsiaTotal     
    (in millions)& CanadaAmericaEast & AfricaPacificWaterFuelingDistributionOther/ElimsConsolidated
               
    Q3 2020$111.5 $30.1 $41.8 $19.5 $202.9 $68.4 $98.0 ($18.1)$351.2  
    Q3 2021$157.7 $36.5 $46.9 $19.6 $260.7 $81.0 $140.2 ($22.9)$459.0  
    Change$46.2 $6.4 $5.1 $0.1 $57.8 $12.6 $42.2 ($4.8)$107.8  
    % Change 41%  21%  12%  1%  28%  18%  43%   31%  
               
    Foreign currency translation$0.9 ($0.3)($0.1)$0.2 $0.7 $0.4 $0.0    
    % Change 1%  -1% 0%  1%  0%  1%  0%    
               
    Acquisitions$33.7 $0.0 $0.0 $0.5 $34.2 $0.0 $13.2    
               
    Volume/Price$11.6 $6.7 $5.2 ($0.6)$22.9 $12.2 $29.0    
    % Change 10%  22%  12%  -3% 11%  18%  30%    
               

     

    Key Performance Indicators: Operating Income and Margin Summary

    Operating Income and Margins      
    (in millions)For the Third Quarter 2021
     WaterFuelingDistributionOther/ElimsConsolidated
    Operating Income / (Loss)$36.8 $23.9 $12.3 $(16.4)$56.6 
    % Operating Income To Net Sales 14.1% 29.5% 8.8%  12.3%
          
    Restructuring$0.1 $- $- $- $0.1 
          
    Operating Income/(Loss) before Restructuring$36.9 $23.9 $12.3 $(16.4)$56.7 
    % Operating Income to Net Sales Before Restructuring 14.2% 29.5% 8.8%  12.4%
          
          
    Operating Income and Margins      
    (in millions)For the Third Quarter 2020
     WaterFuelingDistributionOther/ElimsConsolidated
    Operating Income / (Loss)$36.6 $18.9 $6.4 $(13.5)$48.4 
    % Operating Income To Net Sales 18.0% 27.6% 6.5%  13.8%
          
    Restructuring$0.4 $- $- $- $0.4 
          
    Operating Income/(Loss) before Restructuring$37.0 $18.9 $6.4 $(13.5)$48.8 
    % Operating Income to Net Sales Before Restructuring 18.2% 27.6% 6.5%  13.9%
          

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