• Franklin Electric Reports Record Fourth Quarter 2022 and Full Year 2022 Results

    Source: Nasdaq GlobeNewswire / 14 Feb 2023 07:00:02   America/Chicago

    Fourth Quarter 2022 Highlights

    • Sales of $489.4 million, an increase of 13% over the prior year, was a fourth quarter record
    • Robust sales growth in all three Segments; Distribution up 27%, Water Systems up 9%, and Fueling Systems up 8%
    • Operating income was a fourth quarter record at $56.2 million, an increase of 19% over the prior year
    • GAAP fully diluted earnings per share (EPS) was $0.84, a decrease of $0.01 to prior year

    Full Year 2022 Highlights

    • Full Year record sales of $2.0 billion, an increase of 23% over the prior year
    • Strong sales growth in all three Segments; Distribution up 34%, Water Systems up 20%, and Fueling Systems up 16%
    • Operating income for 2022 was a record at $257.2 million, an increase of 36% over the prior year
    • GAAP fully diluted EPS was a record at $3.97, an increase of 22% over the prior year

    FORT WAYNE, Ind., Feb. 14, 2023 (GLOBE NEWSWIRE) -- Franklin Electric Co. Inc. today announced fourth quarter and full year financial results for fiscal year 2022.

    Fourth quarter 2022 sales were $489.4 million, compared to fourth quarter 2021 sales of $432.5 million. Fourth quarter 2022 operating income was $56.2 million, compared to fourth quarter operating income in 2021 of $47.2 million. Fourth quarter 2022 GAAP fully diluted EPS was $0.84, versus GAAP fully diluted EPS in the fourth quarter 2021 of $0.85. Worth noting, the Company’s fourth quarter 2021 results included a $6.5 million one-time gain on a bargain purchase price transaction.

    Full year 2022 sales were $2.0 billion, compared to full year 2021 sales of $1.7 billion. Full year 2022 operating income was $257.2 million, compared to operating income in 2021 of $189.2 million. Full year 2022 GAAP fully diluted EPS was $3.97, versus GAAP fully diluted EPS in 2021 of $3.25.

    “Franklin Electric delivered a solid fourth quarter finish to 2022 with our eighth consecutive quarter of double-digit sales and operating income growth over the prior-year quarter, which capped another record full year for sales, operating income and earnings per share. Once again, our global team rose to the occasion and delivered in a challenging, but improving, operating environment,” commented Gregg Sengstack, Franklin Electric’s Chairperson and Chief Executive Officer.

    “Demand remained strong across our business in the fourth quarter, demonstrated by sustained top-line growth and the elevated backlog at year-end which carries over into 2023. Looking forward, we are well positioned to continue our momentum based on the robust demand across our end markets, our diverse customer base, and the growing global need for clean water and safe, cost-effective fueling solutions.” Mr. Sengstack concluded.

    Segment Summaries

    Water Systems sales, a new fourth quarter record, were $281.3 million in the fourth quarter 2022, an increase of $23.3 million compared to the fourth quarter 2021. Sales increases were led by pricing actions and healthy end market demand across all major product lines in groundwater pumping, surface pumping and water treatment. Water Systems operating income in the fourth quarter was $44.6 million, a new fourth quarter record, driven by higher sales and operating leverage. Fourth quarter 2021 Water Systems operating income was $36.4 million.

    Distribution sales, a new fourth quarter record, were $148.9 million in the fourth quarter 2022, an increase of $32.0 million compared to the fourth quarter 2021. The Distribution segment operating income was $2.9 million in the fourth quarter of 2022 compared to fourth quarter 2021 operating income of $5.6 million. Distribution segment sales and operating income were both negatively impacted by weather, seasonality and margin compression from unfavorable pricing of commodity-based products sold through the business.

    Fueling Systems sales, a new fourth quarter record, were $85.5 million in the fourth quarter 2022, an increase of $6.5 million compared to the fourth quarter 2021. Fueling Systems sales increases in the U.S. and Canada were led by higher demand for Fuel Management Systems compared to the fourth quarter 2021. Outside the U.S. and Canada, Fueling Systems revenues were flat. Fueling Systems operating income, a new fourth quarter record, was $24.3 million in the fourth quarter of 2022, compared to $22.2 million in the fourth quarter 2021.

    Cash Flow

    Net cash flows from operating activities for 2022 were $101.7 million versus $129.8 million in the same period in 2021. The decrease was primarily due to higher working capital requirements in support of higher revenues.

    2023 Guidance

    The Company expects its full year 2023 sales to be in the range of $2.1 billion to $2.2 billion and full year 2023 EPS to be in the range of $4.10 to $4.30.

    Earnings Conference Call

    A conference call to review earnings and other developments in the business will commence at 9:00 am ET. The fourth quarter and fiscal year 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/usehvppx

    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/BI060baf2deda443b988b32fb943569249

    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, February 14, 2023 through 9AM ET on Tuesday, February 21, 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 CO., INC. AND CONSOLIDATED SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited)
            
    (In thousands, except per share amounts)       
            
     Fourth Quarter Ended Fiscal Year End
     December 31, December 31, December 31, December 31,
      2022   2021   2022   2021 
            
    Net sales$489,431  $432,520  $2,043,711  $1,661,865 
            
    Cost of sales 323,213   287,332   1,352,276   1,085,776 
            
    Gross profit 166,218   145,188   691,435   576,089 
            
    Selling, general, and administrative expenses 109,724   97,741   432,076   386,275 
            
    Restructuring expense 272   240   2,170   621 
            
    Operating income 56,222   47,207   257,189   189,193 
            
    Interest expense (4,033)  (1,356)  (11,525)  (5,196)
    Other income/(expense), net (414)  6,447   (3,201)  7,978 
    Foreign exchange income/(expense) (2,946)  (615)  (7,236)  (2,269)
            
    Income before income taxes 48,829   51,683   235,227   189,706 
            
    Income tax expense 8,872   10,688   46,416   34,731 
            
    Net income$39,957  $40,995  $188,811  $154,975 
            
    Less: Net (income)/loss attributable to noncontrolling interests (378)  (328)  (1,479)  (1,115)
            
    Net income attributable to Franklin Electric Co., Inc.$39,579  $40,667  $187,332  $153,860 
            
    Income per share:       
    Basic$0.85  $0.87  $4.02  $3.29 
    Diluted$0.84  $0.85  $3.97  $3.25 



    FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)
        
    (In thousands)   
        
     December 31, December 31,
      2022   2021 
    ASSETS   
        
    Cash and equivalents$45,790  $40,536 
    Receivables (net) 230,404   196,173 
    Inventories 544,980   449,975 
    Other current assets 36,916   37,963 
    Total current assets 858,090   724,647 
        
    Property, plant, and equipment, net 215,154   210,654 
    Lease right-of-use assets, net 48,948   48,379 
    Goodwill and other assets 572,009   591,485 
    Total assets$1,694,201  $1,575,165 
        
        
    LIABILITIES AND EQUITY   
        
    Accounts payable$139,266  $164,758 
    Accrued expenses and other current liabilities 123,788   117,955 
    Current lease liability 15,959   15,320 
    Current maturities of long-term debt and   
    short-term borrowings 126,756   97,981 
    Total current liabilities 405,769   396,014 
        
    Long-term debt 89,271   90,535 
    Long-term lease liability 32,858   32,937 
    Income taxes payable non-current 8,707   11,610 
    Deferred income taxes 29,744   28,162 
    Employee benefit plans 31,889   40,696 
    Other long-term liabilities 25,209   26,568 
     
    Redeemable noncontrolling interest 620   (19)
        
    Total equity 1,070,134   948,662 
    Total liabilities and equity$1,694,201  $1,575,165 
        



    FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
    (In thousands)   
        
      2022   2021 
    Cash flows from operating activities:   
    Net income 188,811  $154,975 
    Adjustments to reconcile net income to net cash flows from operating activities:   
    Depreciation and amortization 50,374   44,572 
    Non-cash lease expense 17,406   13,808 
    Share-based compensation 10,973   11,731 
    Gain from bargain purchase of business -   (6,482)
    Other 7,291   2,126 
    Changes in assets and liabilities:   
    Receivables (44,800)  (31,925)
    Inventory (101,080)  (123,076)
    Accounts payable and accrued expenses (12,283)  89,038 
    Operating leases (17,406)  (13,808)
    Income taxes-U.S. Tax Cuts and Jobs Act (355)  - 
    Other 2,743   (11,196)
        
    Net cash flows from operating activities 101,674   129,763 
        
    Cash flows from investing activities:   
    Additions to property, plant, and equipment (41,903)  (30,116)
    Proceeds from sale of property, plant, and equipment 6   979 
    Acquisitions and investments (1,186)  (235,701)
    Other investing activities 9   33 
        
    Net cash flows from investing activities (43,074)  (264,805)
        
    Cash flows from financing activities:   
    Net change in debt 28,936   94,716 
    Proceeds from issuance of common stock 3,859   15,524 
    Purchases of common stock (40,490)  (25,949)
    Dividends paid (36,991)  (33,398)
    Deferred payments for acquisitions (3,786)  - 
    Net cash flows from financing activities (48,472)  50,893 
        
    Effect of exchange rate changes on cash (4,874)  (6,102)
    Net change in cash and equivalents 5,254   (90,251)
    Cash and equivalents at beginning of period 40,536   130,787 
    Cash and equivalents at end of period$45,790  $40,536 



    Key Performance Indicators: Earnings Per Share Calculations 

     For the Fourth Quarter
    Earnings Before and After Restructuring 2022   2021   Change 
    (in millions) 
    Net Income attributable to FE Co., Inc. Reported$39.6  $40.7   -3%
    Allocated Earnings$(0.2) $(0.2)    
    Earnings for EPS Calculations$39.4  $40.5   -3%
                
    Restructuring (before tax):$0.3  $0.2     
                
    Restructuring, net of tax:$0.2  $0.2     
                
    Earnings before Restructuring$39.6  $40.7   -3%
                
     For the Fourth Quarter 
    Earnings Per Share Before and After Restructuring
    		 2022   2021   Change 
    (in millions except Earnings Per Share)           
    Average Fully Diluted Shares Outstanding 47.0   47.0   0%
                
    Fully Diluted Earnings Per Share ("EPS") Reported$0.84  $0.85   -1%
                
    Restructuring Per Share, net of tax$-  $0.01     
                
    Fully Diluted EPS before Restructuring$0.84  $0.86   -2%


     For the Full Year of
    Earnings Before and After Restructuring 2022   2021   Change 
    (in millions)         
    Net Income attributable to FE Co., Inc. Reported$187.3  $153.9   22%
    Allocated Earnings$(0.7) $(0.9)    
    Earnings for EPS Calculations$186.6  $153.0   22%
              
    Restructuring (before tax):$2.2  $0.6     
              
    Restructuring, net of tax:$1.8  $0.5     
    Earnings before Restructuring$188.4  $153.5   23%
              
     For the Full Year of
    Earnings Per Share2022  2021   Change 
    Before and After Restructuring         
    (in millions except Earnings Per Share)         
              
    Average Fully Diluted Shares Outstanding47.0  47.0   0%
              
    Fully Diluted Earnings Per Share ("EPS") Reported$3.97  $3.25   22%
              
    Restructuring Per Share, net of tax$0.03  $0.01     
                
    Fully Diluted EPS before Restructuring$4.00  $3.26   23%



    Key Performance Indicators: Net Sales Summary

                  

     Net Sales For the Fourth Quarter
    (in millions) United States
    & Canada    		   Latin
    America    		   Europe,
    Middle
    East & Africa    		   Asia
    Pacific    		   Total
    Water    		   Fueling   Distribution   Other/Elims   Consolidated 


    Q4 2021

    $

    148.9    		  

    $

    36.6    		  

    $

    47.3    		  

    $

    25.2    		  

    $

    258.0    		  

    $

    79.0    		  

    $

    116.9    		  

    $

    (21.4

    )    		 

    $

    432.5    		 
    Q4 2022$171.0  $38.4  $46.0  $25.9  $281.3  $85.5  $148.9  $(26.3) $489.4 
    Change$22.1  $1.8  $(1.3) $0.7  $23.3  $6.5  $32.0  $(4.9) $56.9 
    % Change 15%  5%  -3%  3%  9%  8%  27%   13%
                                     
    Foreign currency translation$(1.4) $(2.8) $(12.2) $(1.8) $(18.2) $(1.5) $0.0    
    % Change -1%  -8%  -26%  -7%  -7%  -2%  0%   
                                   
    Acquisitions$3.5  $0.0  $0.0  $0.0  $3.5  $0.0  $17.5    
                                   
    Volume/Price$20.0  $4.6  $10.9  $2.5  $38.0  $8.0  $14.5    
    % Change 13%  13%  23%  10%  15%  10%  12%   


     Net Sales For the Full Year 
    (in millions) United
    States
    & Canada    		   Latin
    America    		   Europe,
    Middle
    East & Africa    		   Asia
    Pacific    		   Total
    Water    		   Fueling   Distribution   Other/Elims   Consolidated 


    FY 2021

    $

    549.2    		  

    $

    139.5    		  

    $

    189.8    		  

    $

    85.1    		  

    $

    963.6    		  

    $

    289.1    		  

    $

    497.6    		  

    $

    (88.4

    )    		 

    $

    1,661.9    		 
    FY 2022$712.9  $159.3  $192.8  $92.5  $1,157.5  $334.1  $668.1  $(116.0) $2,043.7 
    Change$163.7  $19.8  $3.0  $7.4  $193.9  $45.0  $170.5  $(27.6) $381.8 
    % Change 30%  14%  2%  9%  20%  16%  34%      23%
                                        
    Foreign currency translation$(3.0) $(5.7) $(58.3) $(4.7) $(71.7) $(5.4) $0.0         
    % Change -1%  -4%  -31%  -6%  -7%  -2%  0%        
                                        
    Acquisitions$54.1  $0.0  $0.0  $4.7  $58.8  $0.0  $73.1         
                                        
    Volume/Price$112.6  $25.5  $61.3  $7.4  $206.8  $50.4  $97.4         
    % Change 21%  18%  32%  9%  21%  17%  20%        



    Key Performance Indicators: Operating Income and Margin Summary

                        
    Operating Income and Margins                   
    (in millions)For the Fourth Quarter 2022
      Water   Fueling   Distribution   Other/Elims   Consolidated 
    Operating Income / (Loss)$44.6  $24.3  $2.9  $(15.6) $56.2 
    % Operating Income To Net Sales 15.9%   28.4%   1.9%       11.5%
                        
    Restructuring$0.2  $0.1  $-  $-  $0.3 
                        
    Operating Income/(Loss) before Restructuring$44.8  $24.4  $2.9  $(15.6) $56.5 
    % Operating Income to Net Sales Before Restructuring 15.9%   28.5%   1.9%       11.5%
                        
                        
    Operating Income and Margins                   
    (in millions)For the Fourth Quarter 2021
      Water   Fueling   Distribution   Other/Elims   Consolidated 
    Operating Income / (Loss)$36.4  $22.2  $5.6  $(17.0) $47.2 
    % Operating Income To Net Sales 14.1%   28.1%   4.8%      10.9%
                        
    Restructuring$0.2  $-  $-  $-  $0.2 
                        
    Operating Income/(Loss) before Restructuring$36.6  $22.2  $5.6  $(17.0) $47.4 
    % Operating Income to Net Sales Before Restructuring 14.2%   28.1%   4.8%      11.0%


    Operating Income and Margins 
    (in millions)For the Full Year of 2022
      Water   Fueling   Distribution   Other/Elims   Consolidated 
    Operating Income / (Loss)$172.3  $96.8  $54.5  $(66.4) $257.2 
    % Operating Income To Net Sales 14.9%  29.0%  8.2%   12.6%
                     
    Restructuring$1.3  $0.7  $0.2  $-  $2.2 
          
    Operating Income/(Loss) before     
    Restructuring$173.6  $97.5  $54.7  $(66.4) $259.4 
    % Operating Income to Net Sales 15.0%  29.2%  8.2%   12.7%
    Before Restructuring     
          
    Operating Income and Margins     
    (in millions)For the Full Year of 2021
      Water   Fueling   Distribution   Other/Elims   Consolidated 
    Operating Income / (Loss)$139.1  $79.5  $35.9  $(65.3) $189.2 
    % Operating Income To Net Sales 14.4%  27.5%  7.2%   11.4%
                     
    Restructuring$0.5  $-  $0.1  $-  $0.6 
                        
    Operating Income/(Loss) before     
    Restructuring$139.6  $79.5  $36.0  $(65.3) $189.8 
    % Operating Income to Net Sales 14.5%  27.5%  7.2%   11.4%
    Before Restructuring     

    Franklin Electric Contact:

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

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