Franklin Electric Reports Record First Quarter 2022 Results


First Quarter 2022 Highlights

  • Record sales of $451.5 million, compared to first quarter 2021 sales of $333.0 million, an increase of 36%
  • Strong organic sales growth in all three Segments; Fueling Systems 29%, Water Systems 27%, and Distribution 26%
  • Operating income was a record at $39.9 million, compared to first quarter operating income in 2021 of $33.8 million, an increase of 18%
  • GAAP fully diluted earnings per share (EPS) was $0.63, a new record for any first quarter

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

First quarter 2022 sales were $451.5 million, compared to first quarter 2021 sales of $333.0 million.   First quarter 2022 operating income was $39.9 million, compared to first quarter operating income in 2021 of $33.8 million.  

First quarter 2022 GAAP fully diluted earnings per share was $0.63, versus GAAP fully diluted EPS in the first quarter 2021 of $0.59.  

“Overall, the first quarter was a strong start to the year as we delivered another record first quarter for revenue, operating income and earnings per share. We maintained our momentum with continued strong demand across all our businesses. Our Distribution business posted year-over-year sales growth of 41 percent while our Water Systems and Fueling Systems businesses delivered sales growth of 38 and 28 percent, respectively with all business units benefitting from strong price and volume performance to drive profitable growth,” commented Gregg Sengstack, Franklin Electric’s Chairperson and Chief Executive Officer.

“We achieved record top line results on strong year-over-year organic and acquisition growth, while supply chain and inflationary challenges persisted during the first quarter constraining our margins, and our open order balance increased during the first quarter which is indicative of the current demand environment. Our team remains focused on managing these impacts while meeting our customers’ needs, and we will remain agile in response to the evolving landscape,” concluded Mr. Sengstack.

Segment Summaries

Water Systems sales, a new record for any first quarter, were $272.6 million in the first quarter 2022, an increase of $75.0 million or 38 percent versus the first quarter 2021. Water Systems sales, excluding acquisitions and the impact of foreign currency translation, were up about 27 percent compared to the first quarter 2021. Sales of groundwater pumping, surface pumping and dewatering equipment increased due to strong end market demand.   Water Systems operating income in the first quarter was $33.2 million driven by higher sales. First quarter 2021 Water Systems operating income was $31.3 million.

Distribution sales, a new record for any first quarter, were $134.9 million in the first quarter 2022. The Distribution segment organic sales increased 26 percent compared to the first 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 growth from acquisition. The Distribution segment operating income was $9.4 million in the first quarter of 2022 compared to first quarter 2021 operating income of $2.0 million.

Fueling Systems sales, a new record for any first quarter, were $72.5 million in the first quarter 2022, an increase of $15.7 million or 28 percent versus the first quarter 2021. Fueling Systems sales in the U.S. and Canada increased by about 33 percent compared to the first quarter 2021. Outside the U.S. and Canada, Fueling Systems revenues increased by about 2 percent, as sales increases of 4 percent in the rest of the world outside of China were offset by lower sales in China. Fueling Systems operating income in the first quarter was $17.7 million, compared to $14.9 million in the first quarter of 2021.

2022 Guidance

The Company is maintaining its full year 2022 sales to be in the range of $1.90 billion to $2.05 billion and full year 2022 earnings per share before restructuring expenses to be in the range from $3.50 to $3.75.

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 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/wuadmxpg

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: 5883286.

A replay of the conference call will be available Tuesday, April 26, 2022, at 12:00 noon ET through noon ET on Tuesday, May 3, 2022, by dialing 855.859.2056 for domestic calls and 404.537.3406 for international calls. The replay passcode is: 5883286.

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)   
    
 First Quarter Ended
 March 31, March 31,
  2022   2021 
    
Net sales$451,470  $333,046 
    
Cost of sales 306,136   217,500 
    
Gross profit 145,334   115,546 
    
Selling, general, and administrative expenses 104,673   81,603 
    
Restructuring expense 720   152 
    
Operating income 39,941   33,791 
 
Interest expense (1,494)  (1,090)
Other income/(expense), net (378)  (100)
Foreign exchange income/(expense) (585)  (57)
    
Income before income taxes 37,484   32,544 
    
Income tax (benefit)/expense 7,365   4,381 
    
Net income$30,119  $28,163 
    
Less: Net income attributable to noncontrolling interests (354)  (283)
    
Net income attributable to Franklin Electric Co., Inc.$29,765  $27,880 
    
Income per share:   
Basic$0.64  $0.60 
Diluted$0.63  $0.59 
    


FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
    
(In thousands)   
    
 March 31 December 31,
 2022 2021
ASSETS   
    
Cash and equivalents$ 38,581 $ 40,536
Receivables (net)229,736 196,173
Inventories527,867 449,975
Other current assets37,401 37,963
Total current assets833,585 724,647
    
Property, plant, and equipment, net214,190 210,654
Right-of-Use Asset, net46,458 48,379
Goodwill and other assets588,956 591,485
Total assets$ 1,683,189 $ 1,575,165
    
    
LIABILITIES AND EQUITY   
    
Accounts payable$ 190,488 $ 164,758
Accrued expenses and other current liabilities91,066 117,955
Current lease liability15,188 15,320
Current maturities of long-term debt and   
short-term borrowings194,846 97,981
Total current liabilities491,588 396,014
    
Long-term debt89,933 90,535
Long-term lease liability31,140 32,937
Income taxes payable non-current11,610 11,610
Deferred income taxes29,828 28,162
Employee benefit plans39,926 40,696
Other long-term liabilities24,999 26,568
 
Redeemable noncontrolling interest106 (19)
    
Total equity964,059 948,662
Total liabilities and equity$ 1,683,189 $ 1,575,165
    


FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended
(In thousands) March 31, March 31, 
 2022 2021
Cash flows from operating activities:   
Net income$30,119 $28,163
Adjustments to reconcile net income to net   
cash flows from operating activities:   
Depreciation and amortization12,078 9,574
Non-cash lease expense4,181 3,068
Share-based compensation3,985 4,190
Other2,473 359
Changes in assets and liabilities:   
Receivables(34,119) (24,196)
Inventory(74,690) (14,327)
Accounts payable and accrued expenses(2,753) (298)
Operating leases(4,181) (3,068)
Other1,596 1,917
    
Net cash flows from operating activities(61,311) 5,382
    
Cash flows from investing activities:   
Additions to property, plant, and equipment(9,456) (6,744)
Proceeds from sale of property, plant, and equipment- -
Acquisitions and investments553 70
Other investing activities- 3
    
Net cash flows from investing activities(8,903) (6,671)
    
Cash flows from financing activities:   
Net change in debt96,851 (457)
Proceeds from issuance of common stock343 5,083
Purchases of common stock(19,319) (4,849)
Dividends paid(9,130) (8,143)
Net cash flows from financing activities68,745 (8,366)
    
Effect of exchange rate changes on cash(486) (2,801)
Net change in cash and equivalents(1,955) (12,456)
Cash and equivalents at beginning of period40,536 130,787
Cash and equivalents at end of period$38,581 $118,331
    

Key Performance Indicators: Earnings Per Share Calculations

  For the First Quarter
Earnings Before and After Restructuring  2022  2021 Change
(in millions)    
Net Income attributable to FE Co., Inc. Reported $29.8 $27.9 7%
Allocated Earnings $(0.1)$(0.2) 
Earnings for EPS Calculations $29.7 $27.7 7%
     
Restructuring (before tax): $0.7 $0.2  
     
Restructuring, net of tax: $0.6 $0.1  
     
Earnings before Restructuring $30.3 $27.8 9%
     
  For the First Quarter
Earnings Per Share  2022  2021 Change
Before and After Restructuring    
(in millions except Earnings Per Share)    
     
Average Fully Diluted Shares Outstanding  47.1  46.9 0%
     
Fully Diluted Earnings Per Share ("EPS") Reported $0.63 $0.59 7%
     
Restructuring Per Share, net of tax $0.01 $-  
     
Fully Diluted EPS before Restructuring $0.64 $0.59 8%
     

Key Performance Indicators: Net Sales Summary

 Net Sales
 United StatesLatinEurope, MiddleAsiaTotal    
(in millions)& CanadaAmericaEast & AfricaPacificWaterFuelingDistributionOther/ElimsConsolidated
          
Q1 2021$101.3 $31.7 $44.4 $20.2 $197.6 $56.8 $95.7 $(17.1)$333.0 
Q1 2022$163.2 $37.9 $51.0 $20.5 $272.6 $72.5 $134.9 $(28.5)$451.5 
Change$61.9 $6.2 $6.6 $0.3 $75.0 $15.7 $39.2 $(11.4)$118.5 
% Change 61% 20% 15% 1% 38% 28% 41%  36%
          
Foreign currency translation$0.0 $(0.2)$(11.6)$(0.6)($(12.4)$(0.7)$0.0   
% Change 0% -1% -26% -3% -6% -1% 0%  
          
Acquisitions$32.1 $0.0 $0.0 $1.8 $33.9 $0.0 $14.3   
          
Volume/Price$29.8 $6.4 $18.2 $(0.9)$53.5 $16.4 $24.9   
% Change 29% 20% 41% -4% 27% 29% 26%  
                        

Key Performance Indicators: Operating Income and Margin Summary

Operating Income and Margins       
 (in millions) For the First Quarter 2022
  WaterFuelingDistributionOther/Elims  Consolidated
Operating Income / (Loss) $33.2 $17.7 $9.4  $(20.4) $39.9 
% Operating Income To Net Sales  12.2% 24.4% 7.0%     8.8%
                  
Restructuring $0.6 - $0.1   $-  $0.7 
                  
Operating Income/(Loss) before Restructuring $33.8 $17.7 $9.5  $(20.4) $40.6 
% Operating Income to Net Sales Before Restructuring  12.4% 24.4% 7.0%     9.0%
         
         
Operating Income and Margins       
(in millions)  For the First Quarter 2021
  WaterFuelingDistribution 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%