• Franklin Electric Reports Record First Quarter 2021 Results

    Source: Nasdaq GlobeNewswire / 27 Apr 2021 07:00:03   America/Chicago

    First Quarter 2021 Highlights

    • Record sales of $333.0 million, compared to first quarter 2020 sales of $266.8 million, an increase of 25%
    • Strong organic sales growth for Distribution of 31% and Water Systems of 18%
    • Operating income was $33.8 million, compared to first quarter operating income in 2020 of $13.8 million, an increase of a 144%
    • GAAP fully diluted earnings per share (EPS) was $0.59, versus GAAP fully diluted EPS in the first quarter 2020 of $0.23, an increase of 157%
    • Working capital as a percent of trailing twelve months sales improved 220 basis points to 27.7%

    FORT WAYNE, Ind., April 27, 2021 (GLOBE NEWSWIRE) -- Franklin Electric Co. Inc. today announced first quarter 2021 financial results.

    First quarter 2021 sales were $333.0 million, compared to first quarter 2020 sales of $266.8 million. First quarter 2021 operating income was $33.8 million, compared to first quarter operating income in 2020 of $13.8 million, an increase of a 144 percent.

    First quarter 2021 GAAP fully diluted earnings per share (EPS) was $0.59, versus GAAP fully diluted EPS in the first quarter 2020 of $0.23.  
      
    “Building off a strong fourth quarter, our Water Systems and Distribution businesses maintained their momentum, delivering record sales and earnings for the first quarter. At the same time, our Fueling Systems business hit an inflection point, and appears to have turned the post-pandemic corner, producing solid revenue growth alongside 23 percent operating income growth versus the first quarter last year,” commented Gregg Sengstack, Franklin Electric’s Chairperson and Chief Executive Officer. “While 2021 is off to a great start with significant momentum at our heels and a strong strategy for growth, we remain vigilant in adapting to the ongoing impacts of the global pandemic, which continues to cause disruption across the globe.”

    Mr. Sengstack concluded, “We are confident that our approach to grow as a global provider of water and fuel systems positions us well to meet the needs of our customers and generate value for our shareholders. As a result, we are increasing our full year earnings per share before restructuring expense guidance to be in the range of $2.80 to $3.00, given the demand environment we see in most of the end markets we serve.”

    Segment Summaries

    Water Systems sales were $197.6 million in the first quarter 2021, an increase of $33.5 million or 20 percent versus the first quarter 2020. Water Systems sales, excluding acquisitions and the impact of foreign currency translation, were up about 18 percent compared to the first quarter 2020. Sales of groundwater pumping equipment and sales of surface pumping equipment increased due to strong end market demand. These increases were partially offset by lower demand for dewatering equipment. In 2021, Water Systems operating income was a record for any first quarter at $31.3 million driven by price realization, favorable product sales mix and cost management. First quarter 2020 Water Systems operating income was $18.8 million.

    Distribution sales were a record at $95.7 million in the first quarter 2021. The Distribution segment organic sales increased 31 percent compared to the first quarter of 2020. Revenue growth was driven by broad-based demand in all regions and product categories, the Gicon acquisition, customer purchase pull forwards and the Texas winter storm. The Distribution segment operating income was a record at $2.0 million in the first quarter of 2021.

    Fueling Systems sales were $56.8 million in the first quarter 2021, an increase of $1.5 million versus the first quarter 2020. Fueling Systems sales in the U.S. and Canada increased by about 1 percent compared to the first quarter 2020. The increase was due to higher demand for Pumping and Fuel Management Systems. Outside the U.S. and Canada, Fueling Systems revenues increased by about 7 percent, driven primarily by higher sales in Latin America and EMENA. Fueling Systems operating income was a record for any first quarter at $14.9 million in the first quarter of 2021, compared to $12.1 million in the first quarter of 2020, driven by price realization and cost management.

    Cash Flow

    Net cash flows from operating activities in the first quarter 2021 were $5.4 million versus a negative $4.7 million in the same period 2020. The increase was primarily due to higher Net Income and lower net working capital requirements.

    Revised 2021 Guidance

    Due to better than expected first quarter earnings and the recently completed Water Treatment acquisitions, the Company is revising its full year 2021 revenue estimates to be in the range of $1.45 billion to $1.48 billion and full year 2021 earnings per share before restructuring expenses to be in the range from $2.80 to $3.00. The Company’s revised 2021 guidance assumes there will not be any worsening impacts from the global pandemic.

    Earnings Conference Call

    A conference call to review earnings and other developments in the business will commence at 9:00 am ET. The first 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/4c8xwu3v

    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: 9894751.

    A replay of the conference call will be available Tuesday, April 27, 2021 at 12:00 noon ET through noon ET on Tuesday, May 4, 2021, by dialing 855.859.2056 for domestic calls and 404.537.3406 for international calls. The replay passcode is: 9894751.

    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:

    John J. Haines
    Franklin Electric Co., Inc.
    260-824-2900
    Email: jhaines@fele.com

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

        
        
    (In thousands, except per share amounts)   
        
     First Quarter Ended  
     March 31, March 31, 
     2021 2020 
         
    Net sales                            $        333,046  $        266,754  
           
    Cost of sales                                  217,500            176,437  
                                                  
    Gross profit                                   115,546              90,317  
           
    Selling, general, and administrative expenses            81,603              75,623  
           
    Restructuring expense                  152                    873  
                                                
    Operating income                                 33,791              13,821  
                                                                                                                                                                                                           
    Interest expense                    (1,089) (1,234)  
    Other income/(expense), net(100) (202)  
    Foreign exchange income/(expense)(58) 962   
                                                 
    Income before income taxes                              32,544              13,347   
            
    Income tax (benefit)/expense                4,381                 2,555   
                                                   
    Net income                           $          28,163  $          10,792   
            
    Less:  Net income attributable to noncontrolling interests                  (283)                 (149)  
                                                   
    Net income attributable to Franklin Electric Co., Inc.$          27,880  $          10,643   
                                                  
    Income per share:       
      Basic$               0.60  $               0.23   
      Diluted$               0.59  $               0.23   


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

    (In thousands)      
                                                  
                                            March 31,  December 31,  
     2021  2020  
    ASSETS                 
                      
    Cash and equivalents$        118,331  $        130,787  
    Receivables (net)           179,439             159,827  
    Inventories           310,330             300,932  
    Other current assets             27,150               27,708  
    Total current assets           635,250             619,254  
                                                  
    Property, plant, and equipment, net           205,137             209,021  
    Right-of-Use Asset, net             33,449               31,954  
    Goodwill and other assets           407,843             412,078  
    Total assets$     1,281,679  $     1,272,307  
           
           
    LIABILITIES AND EQUITY                            
           
    Accounts payable$        109,984  $           95,903  
    Accrued expenses and other current liabilities             75,941               94,160  
    Current lease liability             11,758               11,090  
    Current maturities of long-term debt and      
         short-term borrowings               2,671                 2,551  
    Total current liabilities           200,354             203,704  
               
    Long-term debt             91,361               91,966  
    Long-term lease liability             21,704               20,866  
    Income taxes payable non-current             11,965               11,965  
    Deferred income taxes             26,521               25,671  
    Employee benefit plans             42,546               44,443  
    Other long-term liabilities             23,710               23,988  
                                                                                                                                                                                                           
    Redeemable noncontrolling interest                (168)                 (245) 
           
    Total equity           863,686             849,949  
    Total liabilities and equity$     1,281,679  $     1,272,307  
           

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

     Three Months Ended 
    (In thousands)     
      March 31,  March 31, 
     2021  2020 
    Cash flows from operating activities:     
    Net income$       28,163  $        10,792 
    Adjustments to reconcile net income to net     
    cash flows from operating activities:     
    Depreciation and amortization            9,574              9,199 
    Non-Cash Lease Expense            3,068              1,962 
    Share-based compensation            4,190              4,352 
    Other               359                (938) 
    Changes in assets and liabilities:     
    Receivables       (24,196)           (2,574)
    Inventory       (14,327)         (19,952)
    Accounts payable and accrued expenses(298
    		)           (4,223)
    Operating Leases          (3,068)           (1,962)
    Other            1,917            (1,312)
          
    Net cash flows from operating activities5,382
    		  (4,656)
          
    Cash flows from investing activities:     
    Additions to property, plant, and equipment          (6,744)           (5,535)
    Proceeds from sale of property, plant, and equipment                    -                    25 
    Acquisitions and investments70            (5,626)
    Other investing activities                   3                       - 
          
    Net cash flows from investing activities      (6,671)         (11,136)
          
    Cash flows from financing activities:     
    Change in debt             (457)           19,670 
    Proceeds from issuance of common stock            5,083                  871 
    Purchases of common stock          (4,849)         (16,981)
    Dividends paid          (8,143)           (7,240)
    Net cash flows from financing activities          (8,366)           (3,680)
          
    Effect of exchange rate changes on cash          (2,801)           (4,946)
    Net change in cash and equivalents(12,456) (24,418)
    Cash and equivalents at beginning of period       130,787            64,405 
    Cash and equivalents at end of period$     118,331  $        39,987 
          



    Key Performance Indicators: Earnings Per Share Calculations

      For the First Quarter 
    Earnings Before and After Restructuring 2021 2020Change 
    (in millions)      
    Net Income attributable to FE Co., Inc. Reported $       27.9 $       10.6163%
    Allocated Earnings $        (0.2) $-  
    Earnings for EPS Calculations $       27.7 $       10.6161%
           
    Restructuring (before tax): $         0.2 $         0.9  
           
    Restructuring, net of tax: $         0.1 $         0.7  
           
    Earnings before Restructuring $       27.8 $       11.3146%
           
      For the First Quarter 
    Earnings Per Share 2021 2020Change 
    Before and After Restructuring       
    (in millions except Earnings Per Share)      
           
    Average Fully Diluted Shares Outstanding          46.9          46.80% 
           
    Fully Diluted Earnings Per Share ("EPS") Reported $       0.59 $       0.23157%
           
    Restructuring Per Share, net of tax           $- $       0.01  
           
    Fully Diluted EPS before Restructuring $       0.59 $       0.24146%
           


    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/ElimsConsolidated 
                      
    Q1 2020$83.9 $28.2 $38.2 $13.8 $164.1 $55.3 $60.4 ($13.0)$266.8 
    Q1 2021$101.3 $31.7 $44.4 $20.2 $197.6 $56.8 $95.7 ($17.1)$333.0 
    Change$17.4 $3.5 $6.2 $6.4 $33.5 $1.5 $35.3 ($4.1)$66.2 
    % Change21%12%16%46%20%3%58% 25%
                      
    Foreign currency translation$1.0 ($5.7) $0.2 $0.8 ($3.7) $0.8 $0.0    
    % Change1%-20% 1%6%-2% 1%0%   
                      
    Acquisitions$7.2 $0.0 $0.0 $0.0 $7.2 $0.0 $16.3    
                      
    Volume/Price$9.2 $9.2 $6.0 $5.6 $30.0 $0.7 $19.0    
    % Change11%33%16%41%18%1%31%   
                      

    Key Performance Indicators: Operating Income and Margin Summary

    Operating Income and Margins   
    (in millions) For the First Quarter 2021
      Water Fueling Distribution Other/Elims Consolidated 
    Operating Income / (Loss) $  31.3 $   14.9 $             2.0 $         (14.4)$             33.8 
    % Operating Income To Net Sales 15.8%26.2%2.1%  10.2%
                
    Restructuring $    0.1  $- $             0.1  $- $               0.2 
                
    Operating Income/(Loss) before Restructuring $  31.4 $   14.9 $             2.1 $         (14.4)$             34.0 
    % Operating Income to Net Sales Before Restructuring 15.9%26.2%2.2%  10.2%
                
                
    Operating Income and Margins   
    (in millions) For the First Quarter 2020
      Water Fueling Distribution Other/Elims Consolidated 
    Operating Income / (Loss) $  18.8 $   12.1 $           (2.2)$         (14.9)$             13.8 
    % Operating Income To Net Sales 11.5%21.9%-3.6%   5.2%
                
    Restructuring $    0.6 $     0.2 $             0.1  $- $               0.9 
                
    Operating Income/(Loss) before Restructuring $  19.4 $   12.3 $           (2.1)$         (14.9)$             14.7 
    % Operating Income to Net Sales Before Restructuring 11.8%22.2%-3.5%   5.5%
                

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