• Franklin Electric Reports Record Third Quarter 2022 Results

    ソース: Nasdaq GlobeNewswire / 25 10 2022 08:00:32   America/New_York

    Third Quarter 2022 Highlights

    • Record sales of $551.7 million, compared to third quarter 2021 sales of $459.0 million, an increase of 20%
    • Strong organic sales growth in all three Segments; Distribution 22%, Water Systems 19%, and Fueling Systems 13%
    • Operating income was a third quarter record at $80.0 million, compared to third quarter operating income in 2021 of $56.6 million, an increase of 41%
    • GAAP fully diluted earnings per share (EPS) was $1.24, a new third quarter record
    • 2022 FY net sales guidance is updated to $2.0 billion to $2.1 billion and 2022 FY earnings per share excluding restructuring guidance to $4.08 to $4.18

    FORT WAYNE, Ind., Oct. 25, 2022 (GLOBE NEWSWIRE) -- Franklin Electric Co. Inc. today announced third quarter financial results for fiscal year 2022.

    Third quarter 2022 sales were $551.7 million, compared to third quarter 2021 sales of $459.0 million. Third quarter 2022 operating income was $80.0 million, compared to third quarter operating income in 2021 of $56.6 million. Third quarter 2022 GAAP fully diluted earnings per share was $1.24, versus GAAP fully diluted EPS in the third quarter 2021 of $0.98.  

    “We are pleased with the strong performance of our global business during the quarter and particularly the resilience demonstrated as we delivered our ninth straight quarter of record results. We continue to see strong demand in our core markets as evidenced by our double-digit top line growth on a consolidated basis and all three operating segments,” commented Gregg Sengstack, Franklin Electric’s Chairperson and Chief Executive Officer. “Furthermore, our open order backlog remains at an elevated level of $250 million indicating on-going strong demand for the remainder of this year and into 2023.”

    “Similar to the second quarter, the operating environment remained choppy. Supply issues improved, but at a slower pace than we anticipated. In this strong inflationary environment, our global team performed exceptionally well with focused cost management, particularly in SG&A expense, where we continue to realize increased operating leverage. This strong performance more than offset the higher than anticipated headwind to earnings from foreign translation and exchange losses in the quarter. As a result, we are revising our guidance for full-year 2022 net sales to between $2.0 billion and $2.1 billion with our 2022 full-year earnings per share excluding restructuring to the range of $4.08 and $4.18, reflecting an increase in our earnings per share guidance midpoint to $4.13.” concluded Mr. Sengstack.

    Segment Summaries

    Water Systems sales, a new third quarter record, were $293.1 million in the third quarter 2022, an increase of $32.4 million or 12 percent versus the third quarter 2021. Water Systems sales, excluding acquisitions and the impact of foreign currency translation, were up about 19 percent compared to the third quarter 2021. Sales increases were led by pricing actions and strong end market demand across all major product lines in groundwater pumping, surface pumping and dewatering equipment. Water Systems operating income in the third quarter was $45.5 million, a new third quarter record, driven by higher sales. Third quarter 2021 Water Systems operating income was $36.8 million.

    Distribution sales, a new record for any quarter, were $193.2 million in the third quarter 2022. The Distribution segment organic sales increased 22 percent compared to the third quarter of 2021. Revenue growth was driven by solid demand primarily in the U.S. groundwater market due to strong price realization in addition to the growth from acquisition. The Distribution segment operating income, a new third quarter record, was $19.0 million in the third quarter of 2022 compared to third quarter 2021 operating income of $12.3 million.

    Fueling Systems sales, a new record for any quarter, were $90.2 million in the third quarter 2022, an increase of $9.2 million versus the third quarter 2021. Fueling Systems sales, excluding the impact of foreign currency translation, were up about 13 percent compared to the third quarter 2021. Fueling Systems sales increases in the U.S. and Canada were led by stronger demand for Fuel Management Systems compared to the third quarter 2021. Outside the U.S. and Canada, Fueling Systems revenues were up, with sales growth in India and EMEA, offsetting lower sales in China. Fueling Systems operating income, a new record for any quarter, was $28.6 million in the third quarter of 2022, compared to $23.9 million in the third quarter of 2021.

    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 2022 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/88bghpev

    For those interested in participating in the question-and-answer portion of the call, please register for the call at the link below.

    https://register.vevent.com/register/BI377bd3eac6cb4e0a942916866ed7386d

    All registrants will receive dial-in information and a PIN allowing them to access the live call. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).

    A replay of the conference call will be available from Tuesday, October 25, 2022 through Tuesday, November 1, 2022, by visiting the listen-only webcast link above.

    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, 2021, 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,
    2022    		  September 30,
    2021    		  September 30,
    2022    		  September 30,
    2021    		 
                
    Net sales$551,672  $459,019  $1,554,280  $1,229,345 
                
    Cost of sales361,077  295,903  1,029,063  798,444 
                
    Gross profit190,595  163,116  525,217  430,901 
                
    Selling, general, and administrative expenses109,366  106,446  322,352  288,534 
                
    Restructuring expense1,185  76  1,898  381 
                
    Operating income80,044  56,594  200,967  141,986 
                
    Interest expense(3,066) (1,384) (7,492) (3,840)
    Other income/(expense), net(1,250) 2,061  (2,787) 1,531 
    Foreign exchange income/(expense)(3,376) (408) (4,290) (1,654)
                
    Income before income taxes72,352  56,863  186,398  138,023 
                
    Income tax expense13,380  10,409  37,544  24,043 
                
    Net income$58,972  $46,454  $148,854  $113,980 
                
    Less:  Net (income)/loss attributable to noncontrolling interests(348) (282) (1,101) (787)
                
    Net income attributable to Franklin Electric Co., Inc.$58,624  $46,172  $147,753  $113,193 
                
    Earnings per share:           
    Basic$1.26  $0.99  $3.17  $2.43 
    Diluted$1.24  $0.98  $3.13  $2.40 
                

    FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)

    (In thousands)    
                                                
                                            September 30, December 31, 
     2022 2021 
    ASSETS               
                    
    Cash and equivalents$           39,523 $           40,536 
    Receivables (net)           251,543            196,173 
    Inventories           557,604            449,975 
    Other current assets             39,049              37,963 
    Total current assets           887,719            724,647 
                                                
    Property, plant, and equipment, net           207,714            210,654 
    Right-of-use asset, net             47,808              48,379 
    Goodwill and other assets           571,766            591,485 
    Total assets$     1,715,007 $     1,575,165 
         
    LIABILITIES AND EQUITY    
         
    Accounts payable$         153,540 $        164,758 
    Accrued expenses and other current liabilities           113,215            117,955 
    Current lease liability             15,434              15,320 
    Current maturities of long-term debt and short-term borrowings           179,619              97,981 
    Total current liabilities           461,808            396,014 
         
    Long-term debt             89,225              90,535 
    Long-term lease liability             32,245              32,937 
    Income taxes payable non-current               8,707              11,610 
    Deferred income taxes             31,971              28,162 
    Employee benefit plans             37,333              40,696 
    Other long-term liabilities             25,547              26,568 
                                                                                                                                                                                                           
    Redeemable noncontrolling interest                   455                    (19)
         
    Total equity        1,027,716            948,662 
    Total liabilities and equity$     1,715,007 $     1,575,165 
         

    FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)

       
     Nine Months Ended
    (In thousands)     
     September 30,  September 30, 
     2022  2021 
    Cash flows from operating activities:     
    Net income                148,854                113,980 
    Adjustments to reconcile net income to net cash flows from operating activities:     
    Depreciation and amortization                  37,067                  32,767 
    Non-cash lease expense                  12,939                     9,394 
    Share-based compensation                    8,940                     8,921 
    Other                    9,160                     1,978 
    Changes in assets and liabilities:     
    Receivables                (73,995)               (57,434)
    Inventory              (122,150)               (85,873)
    Accounts payable and accrued expenses                    1,881                  92,214 
    Operating leases                (12,939)                  (9,394)
    Income taxes-U.S. Tax Cuts and Jobs Act                      (355)                     (355)
    Other                  (2,242)               (12,296)
          
    Net cash flows from operating activities                    7,160                  93,902 
          
    Cash flows from investing activities:     
    Additions to property, plant, and equipment                (29,327)               (20,274)
    Proceeds from sale of property, plant, and equipment                            6                        839 
    Acquisitions and investments                  (1,576)             (193,987)
    Other investing activities                            9                          38 
          
    Net cash flows from investing activities                (30,888)             (213,384)
          
    Cash flows from financing activities:     
    Net change in debt                  83,679                102,395 
    Proceeds from issuance of common stock                    3,584                  11,390 
    Purchases of common stock                (30,731)               (21,138)
    Dividends paid                (27,293)               (24,499)
          
    Net cash flows from financing activities                  29,239                  68,148 
          
    Effect of exchange rate changes on cash                  (6,524)                  (3,501)
    Net change in cash and equivalents                  (1,013)               (54,835)
    Cash and equivalents at beginning of period                  40,536                130,787 
    Cash and equivalents at end of period                  39,523                  75,952 
          

    Key Performance Indicators: Earnings Per Share Calculations

              
      For the Third Quarter
    Earnings Before and After Restructuring 2022 2021 Change
    (in millions)         
    Net Income attributable to FE Co., Inc. Reported $58.6 $46.2 27%
    Allocated Earnings $(0.2)$(0.3)  
    Earnings for EPS Calculations $58.4 $45.9 27%
            
    Restructuring (before tax): $1.2 $0.1   
            
    Restructuring, net of tax: $1.0 $0.1   
            
    Earnings before Restructuring $59.4 $46.0 29%
            
      For the Third Quarter
    Earnings Per Share 2022 2021 Change 
    Before and After Restructuring      
    (in millions except Earnings Per Share)       
            
    Average Fully Diluted Shares Outstanding 47.0 47.0 0%
            
    Fully Diluted Earnings Per Share ("EPS") Reported $1.24 $0.98 27%
            
    Restructuring Per Share, net of tax $0.02 $-   
            
    Fully Diluted EPS before Restructuring $1.26 $0.98 29%
            

    Key Performance Indicators: Net Sales Summary

     Net Sales
     United StatesLatinEurope, MiddleAsiaTotal    
    (in millions)& CanadaAmericaEast & AfricaPacificWaterFuelingDistributionOther/ElimsConsolidated
              
    Q3 2021$157.7$36.5$46.9$19.6$260.7$81.0$140.2($22.9)$459.0
    Q3 2022$183.7$41.3$46.0$22.1$293.1$90.2$193.2($24.8)$551.7
    Change$26.0$4.8($0.9)$2.5$32.4$9.2$53.0($1.9)$92.7
    % Change16%13%-2%13%12%11%38% 20%
              
    Foreign currency translation($0.7)($2.8)($18.3)($1.3)($23.1)($1.7)$0.0  
    % Change0%-8%-39%-7%-9%-2%0%  
              
    Acquisitions$5.6$0.0$0.0$1.0$6.6$0.0$21.7  
              
    Volume/Price$21.1$7.6$17.4$2.8$48.9$10.9$31.3  
    % Change13%21%37%14%19%13%22%  
              

    Key Performance Indicators: Operating Income and Margin Summary

    Operating Income and Margins   
    (in millions)For the Third Quarter 2022
     Water Fueling Distribution Other/Elims Consolidated 
    Operating Income / (Loss)$          45.5 $          28.6 $          19.0 $        (13.1)$          80.0 
    % Operating Income To Net Sales15.5%31.7%9.8%  14.5%
               
    Restructuring$            0.5 $            0.6 $            0.1 $- $            1.2 
               
    Operating Income/(Loss) before Restructuring$          46.0 $          29.2 $          19.1 $        (13.1)$          81.2 
    % Operating Income to Net Sales Before Restructuring15.7%32.4%9.9%  14.7%
               
           
    Operating Income and Margins   
    (in millions)For the Third Quarter 2021
     Water Fueling Distribution Other/Elims Consolidated 
    Operating Income / (Loss)$          36.8 $          23.9 $          12.3 $        (16.4)$          56.6 
    % Operating Income To Net Sales14.1%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 Restructuring14.2%29.5%8.8%  12.4%
               

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