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Franklin Electric Reports Record Second Quarter 2022 Results

Franklin Electric Co., Inc.
Franklin Electric Co., Inc.

Second Quarter 2022 Highlights

  • Record sales of $551.1 million, compared to second quarter 2021 sales of $437.3 million, an increase of 26%

  • Strong organic sales growth in all three Segments; Water Systems 27%, Fueling Systems 21%, and Distribution 18%

  • Operating income was a record at $81.0 million, compared to second quarter operating income in 2021 of $51.6 million, an increase of 57%

  • GAAP fully diluted earnings per share (EPS) was $1.26, a new record for any quarter

  • 2022 FY net sales guidance is updated to $2.00 billion to $2.15 billion and 2022 FY earnings per share excluding restructuring to $4.00 to $4.20

FORT WAYNE, Ind., July 26, 2022 (GLOBE NEWSWIRE) -- Franklin Electric Co. Inc. today announced second quarter financial results for fiscal year 2022.

ANNUNCIO PUBBLICITARIO

Second quarter 2022 sales were $551.1 million, compared to second quarter 2021 sales of $437.3 million.   Second quarter 2022 operating income was $81.0 million, compared to second quarter operating income in 2021 of $51.6 million. Second quarter 2022 GAAP fully diluted earnings per share was $1.26, versus GAAP fully diluted EPS in the second quarter 2021 of $0.83.

“We are pleased to report another quarter of record performance for the Company. Our second quarter performance was strong with year over year double digit top-line growth overall and by all three business segments. Sequential margin improvement was driven by robust demand in our core markets, continuing price realization to offset inflationary cost pressures and solid execution by our team to manage costs all while navigating in an uncertain environment,” commented Gregg Sengstack, Franklin Electric’s Chairperson and Chief Executive Officer.

“We remain focused on executing in the short-term while delivering long-term growth and value creation for our stakeholders. While it remains a challenging business environment with inflation persisting and supply issues continuing in the near-term, I am confident in our ability to continue to manage these challenges. Based on our second quarter performance and current outlook for the second half of the year, we are revising our full-year 2022 guidance, increasing consolidated net sales to between $2.00 billion and $2.15 billion. Furthermore, we are revising and increasing our 2022 full-year earnings per share excluding restructuring to between $4.00 and $4.20,” concluded Mr. Sengstack.

Segment Summaries

Water Systems sales, a new record for any quarter, were $310.5 million in the second quarter 2022, an increase of $63.3 million or 26 percent versus the second quarter 2021. Water Systems sales, excluding acquisitions and the impact of foreign currency translation, were up about 27 percent compared to the second quarter 2021. Sales increases were led by pricing actions and strong end market demand across all major product lines in groundwater pumping, surface pumping, dewatering equipment, and water treatment. Water Systems operating income in the second quarter was $49.0 million, a new record, driven by higher sales. Second quarter 2021 Water Systems operating income was $34.6 million.

Distribution sales, a new record for any quarter, were $191.1 million in the second quarter 2022. The Distribution segment organic sales increased 18 percent compared to the second 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 record, was $23.3 million in the second quarter of 2022 compared to second quarter 2021 operating income of $16.0 million.

Fueling Systems sales, a new record for any quarter, were $86.0 million in the second quarter 2022, an increase of $13.8 million versus the second quarter 2021. Fueling Systems sales in the U.S. and Canada increased by about 20 percent compared to the second quarter 2021. 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. Fueling Systems operating income, a new record, in the second quarter was $26.1 million, compared to $18.5 million in the second 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 second 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/c7wvmk7z

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/BId45560b9b02245829b416ac32b4847ae

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, July 26, 2022 through Tuesday, July 25, 2023, 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Franklin Electric Co., Inc.

$

(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

 

 

 

 

 

 

 

 

 


FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(Unaudited)

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2022

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and equivalents

$

33,225

 

$

40,536

 

Receivables (net)

278,924

 

196,173

 

Inventories

567,143

 

449,975

 

Other current assets

33,891

 

37,963

 

Total current assets

913,183

 

724,647

 

 

 

 

 

 

Property, plant, and equipment, net

210,639

 

210,654

 

Right-of-use asset, net

47,683

 

48,379

 

Goodwill and other assets

580,035

 

591,485

 

Total assets

$

1,751,540

 

$

1,575,165

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

Accounts payable

$

195,614

 

$

164,758

 

Accrued expenses and other current liabilities

105,546

 

117,955

 

Current lease liability

15,313

 

15,320

 

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

 

 

Redeemable noncontrolling interest

284

 

(19)

 

 

 

 

 

 

Total equity

988,573

 

948,662

 

Total liabilities and equity

$

1,751,540

 

$

1,575,165

 

 

 

 

 

 


FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

Six Months Ended

 

(In thousands)

 

 

 

 

 

June 30

 

June 30

 

 

2022

 

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

 

Other

3,639

 

1,753

 

Changes in assets and liabilities:

 

 

 

 

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-U.S. Tax Cuts and Jobs Act

(355)

 

(355)

 

Other

361

 

(6,056)

 

 

 

 

 

 

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

 

Acquisitions and investments

(1,365)

 

(180,917)

 

Other investing activities

(8)

 

27

 

 

 

 

 

 

Net cash flows from investing activities

(21,451)

 

(193,659)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Net change in debt

126,272

 

129,264

 

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

 

 

 

 

 

 

Key Performance Indicators: Earnings Per Share Calculations

 

 

For the Second Quarter

Earnings Before and After Restructuring

 

 

2022

 

 

2021

 

Change

(in millions)

 

 

 

 

Net Income attributable to FE Co., Inc. Reported

 

$

59.4

 

$

39.1

 

52

%

Allocated Earnings

 

$

(0.2

)

$

(0.2

)

 

Earnings for EPS Calculations

 

$

59.2

 

$

38.9

 

52

%

 

 

 

 

 

Restructuring (before tax):

 

$

-

 

$

0.2

 

 

 

 

 

 

 

Restructuring, net of tax:

 

$

-

 

$

0.2

 

 

 

 

 

 

 

Earnings before Restructuring

 

$

59.2

 

$

39.1

 

51

%

 

 

 

 

 

 

 

For the Second Quarter

Earnings Per Share

 

 

2022

 

 

2021

 

Change

Before and After Restructuring

 

 

 

 

(in millions except Earnings Per Share)

 

 

 

 

 

 

 

 

 

Average Fully Diluted Shares Outstanding

 

 

46.9

 

 

47.1

 

0

%

 

 

 

 

 

Fully Diluted Earnings Per Share ("EPS") Reported

 

$

1.26

 

$

0.83

 

52

%

 

 

 

 

 

Restructuring Per Share, net of tax

 

$

-

 

$

-

 

 

 

 

 

 

 

Fully Diluted EPS before Restructuring

 

$

1.26

 

$

0.83

 

52

%

 

 

 

 

 

Key Performance Indicators: Net Sales Summary

 

Net Sales

 

United States

Latin

Europe, Middle

Asia

Total

 

 

 

 

(in millions)

& Canada

America

East & Africa

Pacific

Water

Fueling

Distribution

Other/Elims

Consolidated

 

 

 

 

 

 

 

 

 

 

Q2 2021

$

141.0

 

$

34.7

 

$

51.4

 

$

20.1

 

$

247.2

 

$

72.2

 

$

144.8

 

$

(26.9

)

$

437.3

 

Q2 2022

$

194.9

 

$

41.7

 

$

49.7

 

$

24.2

 

$

310.5

 

$

86.0

 

$

191.1

 

$

(36.5

)

$

551.1

 

Change

$

53.9

 

$

7.0

 

$

(1.7

)

$

4.1

 

$

63.3

 

$

13.8

 

$

46.3

 

$

(9.6

)

$

113.8

 

% Change

 

38

%

 

20

%

 

-3

%

 

20

%

 

26

%

 

19

%

 

32

%

 

 

26

%

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

$

(0.8

)

$

0.1

 

$

(16.2

)

$

(1.0

)

$

(17.9

)

$

(1.5

)

$

0.0

 

 

 

% Change

 

-1

%

 

0

%

 

-32

%

 

-5

%

 

-7

%

 

-2

%

 

0

%

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

$

12.9

 

$

0.0

 

$

0.0

 

$

1.9

 

$

14.8

 

$

0.0

 

$

19.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume/Price

$

41.8

 

$

6.9

 

$

14.5

 

$

3.2

 

$

66.4

 

$

15.3

 

$

26.7

 

 

 

% Change

 

30

%

 

20

%

 

28

%

 

16

%

 

27

%

 

21

%

 

18

%

 

 


Key Performance Indicators: Operating Income and Margin Summary

Operating Income and Margins

 

 

 

 

 

(in millions)

 

For the Second Quarter 2022

 

 

Water

Fueling

Distribution

Other/Elims

Consolidated

Operating Income / (Loss)

 

$

49.0

$

26.1

$

23.3

$

(17.4)

$

81.0

% Operating Income To Net Sales

 

15.8%

30.3%

12.2%

 

14.7%

 

 

 

 

 

 

 

Restructuring

 

$

-

$

-

$

-

$

-

$

-

 

 

 

 

 

 

 

Operating Income/(Loss) before Restructuring

 

$

49.0

$

26.1

$

23.3

$

(17.4)

$

81.0

% Operating Income to Net Sales Before Restructuring

 

15.8%

30.3%

12.2%

 

14.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income and Margins

 

 

 

 

 

(in millions)

 

For the Second Quarter 2021

 

 

Water

Fueling

Distribution

Other/Elims

Consolidated

Operating Income / (Loss)

 

$

34.6

$

18.5

$

16.0

$

(17.5)

$

51.6

% Operating Income To Net Sales

 

14.0%

25.6%

11.0%

 

11.8%

 

 

 

 

 

 

 

Restructuring

 

$

0.1

$

-

$

-

$

-

$

0.1

 

 

 

 

 

 

 

Operating Income/(Loss) before Restructuring

 

$

34.7

$

18.5

$

16.0

$

(17.5)

$

51.7

% Operating Income to Net Sales Before Restructuring

 

14.0%

25.6%

11.0%

 

11.8%