• Franklin Electric Reports Record Fourth Quarter 2021 and Record Full Year 2021 Results

    Source: Nasdaq GlobeNewswire / 15 Feb 2022 07:00:02   America/Chicago

    Fourth Quarter 2021 Highlights

    • Record sales of $432.5 million, compared to fourth quarter 2020 sales of $321.1 million, an increase of 35%
    • Strong organic sales growth in all three Segments; Distribution 39%, Water Systems 23%, and Fueling Systems 21%
    • Operating income was a record at $47.2 million, compared to fourth quarter operating income in 2020 of $34.4 million, an increase of 37%
    • GAAP fully diluted earnings per share (EPS) was $0.85, a new record for any fourth quarter
    • Working capital as a percentage of trailing twelve months sales improved 70 basis points to 26.9%

    Full Year 2021 Highlights

    • Full Year 2021 sales of $1,661.9 million, a record compared to 2020 sales of $1,247.3 million, an increase of 33%
    • Operating income for 2021 was a record at $189.2 million, compared to operating income in 2020 of $130.5 million, an increase of 45%
    • GAAP fully diluted earnings per share (EPS) of $3.25, an increase of 52% from prior year

    FORT WAYNE, Ind., Feb. 15, 2022 (GLOBE NEWSWIRE) -- Franklin Electric Co. Inc. today announced fourth quarter and full year financial results for fiscal year 2021.

    Fourth quarter 2021 sales were $432.5 million, compared to fourth quarter 2020 sales of $321.1 million. Fourth quarter 2021 operating income was $47.2 million, compared to fourth quarter operating income in 2020 of $34.4 million, an increase of 37 percent.

    Fourth quarter 2021 GAAP fully diluted earnings per share (EPS) was $0.85, versus GAAP fully diluted EPS in the fourth quarter 2020 of $0.57. The Company’s fourth quarter 2021 results included a $6.5 million one-time income gain on a bargain purchase price transaction on the income statement in the ‘Other Income/Expense’ section. Although it is not the Company’s practice to note items as non-GAAP adjustments in reported results, we are mentioning this gain due to its size and since the Company does not consider it to be operational in nature.  

    Full year 2021 sales were $1,661.9 million, compared to full year 2020 sales of $1,247.3 million. Full year 2021 operating income was $189.2 million, compared to full year operating income in 2020 of $130.5 million, an increase of 45 percent.

    Full year 2021 GAAP fully diluted earnings per share (EPS) was $3.25, versus GAAP fully diluted EPS in 2020 of $2.14.  

    “Finishing the year on a high note, we once again delivered record fourth quarter sales and earnings results. We saw strong demand across all business segments, with exceptional performance in our Distribution business which posted year-over-year sales growth of 50 percent, and Water Systems and Fueling Systems delivering sales growth of 36 percent and 21 percent, respectively. We also continued to execute our inorganic growth strategy through our acquisitions of a leading groundwater distribution company covering the Northeastern United States and a water treatment business based in the Southwest, which we believe have ample runway for growth,” commented Gregg Sengstack, Franklin Electric’s Chairperson and Chief Executive Officer.

    “2021 was a pivotal year for our business, as we delivered record-breaking results, further extended our geographic footprint and enhanced our product offerings. While supply chain challenges have continued, we believe they have stabilized, and we enter 2022 on strong footing with robust demand across our end markets. As the innovation leader in water systems, distribution, and fueling, Franklin is positioned for growth to meet rapidly accelerating clean water demand worldwide, as well as to address increasing environmental and sustainability concerns around both water and fueling,” concluded Mr. Sengstack.

    Segment Summaries

    Water Systems sales, a new record for any fourth quarter, were $258.0 million in the fourth quarter 2021, an increase of $68.7 million or 36 percent versus the fourth quarter 2020. Water Systems sales, excluding acquisitions and the impact of foreign currency translation, were up about 23 percent compared to the fourth quarter 2020. Sales of groundwater pumping equipment and sales of both surface pumping and dewatering equipment increased due to strong end market demand.   Water Systems operating income in the fourth quarter was $36.4 million driven by higher sales. Fourth quarter 2020 Water Systems operating income was $30.4 million.

    Distribution sales, a new record for any fourth quarter, were $116.9 million in the fourth quarter 2021. The Distribution segment organic sales increased 39 percent compared to the fourth quarter of 2020. Revenue growth was driven by broad-based demand in all regions and product categories in addition to the growth from acquisition. The Distribution segment operating income was $5.6 million in the fourth quarter of 2021 compared to fourth quarter 2020 operating income of $0.5 million.

    Fueling Systems sales, a new record for any fourth quarter, were $79.0 million in the fourth quarter 2021, an increase of $13.5 million versus the fourth quarter 2020. Fueling Systems sales in the U.S. and Canada increased by about 30 percent compared to the fourth quarter 2020. The increase was due to higher demand for Fuel Management and Pumping Systems and Piping. Outside the U.S. and Canada, Fueling Systems revenues were flat, as sales increases of 2 percent in the rest of the world outside of China were offset by lower sales in China. Fueling Systems operating income in the fourth quarter was $22.2 million, compared to $18.8 million in the fourth quarter of 2020.

    Cash Flow

    Net cash flows from operating activities for 2021 were $129.8 million versus $211.9 million in the same period in 2020. The decrease was primarily due to higher working capital requirements in support of higher revenues.

    2022 Guidance

    The Company expects 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 fourth quarter and fiscal year 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/zo5q3gcj

    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 6963617.

    A replay of the conference call will be available Tuesday, February 15, 2022, at 12:00 noon ET through noon ET on Tuesday, February 22, 2022, by dialing 855.859.2056 for domestic calls and 404.537.3406 for international calls. The replay passcode is 6963617.

    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:

    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)           
                
     Fourth Quarter Ended
    		Fiscal Year End 
     December 31,  December 31,  December 31,  December 31, 
     2021  2020  2021  2020 
                
    Net sales$       432,520  $       321,106  $    1,661,865  $    1,247,331 
                
    Cost of sales287,332  209,703  1,085,776  814,192 
                
    Gross profit145,188  111,403  576,089  433,139 
                
    Selling, general, and administrative expenses97,741  76,713  386,275  300,122 
                
    Restructuring expense240  317  621                 2,506 
                
    Operating income47,207  34,373  189,193            130,511 
         
    Interest expense                    (1,356) (1,131) (5,196) (4,627)
    Other income/(expense), net6,447  267  7,978  (795)
    Foreign exchange income/(expense)(615) (1,308) (2,269) (1,392)
                                                       
    Income before income taxes                  51,683  32,201  189,706  123,697 
                
    Income tax (benefit)/expense 10,688  5,213  34,731  22,540 
                                                       
    Net income                           $         40,995  $         26,988  $       154,975  $       101,157 
                
    Less:  Net income attributable to noncontrolling interests(328) (194) (1,115) (697)
                                                       
    Net income attributable to Franklin Electric Co., Inc.$         40,667  $         26,794  $       153,860  $       100,460 
                                                       
    Income per share:           
      Basic$              0.87  $              0.58  $              3.29  $              2.16 
      Diluted$              0.85  $              0.57  $              3.25  $              2.14 
                
                

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

          
    (In thousands)     
                                                 
                                            December 31  December 31, 
     2021  2020 
    ASSETS     
          
    Cash and equivalents$          40,536  $       130,787 
    Receivables (net)196,173  159,827 
    Inventories449,975  300,932 
    Other current assets37,963  27,708 
    Total current assets724,647  619,254 
                                                 
    Property, plant, and equipment, net210,654  209,021 
    Right-of-Use Asset, net48,379  31,954 
    Goodwill and other assets591,485  412,078 
    Total assets$    1,575,165  $    1,272,307 
          
          
    LIABILITIES AND EQUITY                           
          
    Accounts payable$       164,758  $          95,903 
    Accrued expenses and other current liabilities117,955  94,160 
    Current lease liability15,320  11,090 
    Current maturities of long-term debt and short-term borrowings97,981  2,551 
    Total current liabilities396,014  203,704 
          
    Long-term debt90,535  91,966 
    Long-term lease liability32,937  20,866 
    Income taxes payable non-current11,610  11,965 
    Deferred income taxes28,162  25,671 
    Employee benefit plans40,696  44,443 
    Other long-term liabilities26,568  23,988 
                                                                                                                                                                                                            
    Redeemable noncontrolling interest(19) (245)
          
    Total equity948,662  849,949 
    Total liabilities and equity$    1,575,165  $    1,272,307 
          

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

       
    (In thousands)     
          
     2021  2020 
    Cash flows from operating activities:     
    Net income$    154,975  $     101,157 
    Adjustments to reconcile net income to net     
    cash flows from operating activities:     
    Depreciation and amortization44,572  36,488 
    Non-cash lease expense13,808  11,699 
    Share-based compensation11,731  10,066 
    Gain from bargain purchase of business(6,482) - 
    Other2,126  (1,635)
    Changes in assets and liabilities:     
    Receivables(31,925) 22,053 
    Inventory(123,076) 13,144 
    Accounts payable and accrued expenses89,038  20,519 
    Operating leases(13,808) (11,698)
    Other(11,196) 10,061 
          
    Net cash flows from operating activities129,763  211,854 
          
    Cash flows from investing activities:     
    Additions to property, plant, and equipment(30,116) (22,856)
    Proceeds from sale of property, plant, and equipment979  34 
    Acquisitions and investments(235,701) (55,915)
    Other investing activities33  (74)
          
    Net cash flows from investing activities(264,805) (78,811)
          
    Cash flows from financing activities:     
    Net change in debt94,716  (21,073)
    Proceeds from issuance of common stock15,524  3,721 
    Purchases of common stock(25,949) (19,553)
    Dividends paid(33,398) (29,675)
    Net cash flows from financing activities50,893  (66,580)
          
    Effect of exchange rate changes on cash(6,102) (81)
    Net change in cash and equivalents(90,251) 66,382 
    Cash and equivalents at beginning of period130,787  64,405 
    Cash and equivalents at end of period$      40,536  $     130,787 
          


    Key Performance Indicators: Earnings Per Share Calculations

     For the Fourth Quarter For the Full Year of
    Earnings Before and After Restructuring2021 2020 Change  2021 2020 Change 
    (in millions)             
    Net Income attributable to FE Co., Inc. Reported$       40.7 $       26.8 52% $     153.9 $     100.5 53%
    Allocated Earnings$       (0.2)$       (0.2)   $       (0.9)$       (0.7)  
    Earnings for EPS Calculations$       40.5 $       26.6 52% $     153.0 $       99.8 53%
                  
    Restructuring (before tax):$        0.2 $        0.3    $        0.6 $        2.5   
                  
    Restructuring, net of tax:$        0.2 $        0.2    $        0.5 $        2.0   
                  
    Earnings before Restructuring$       40.7 $       26.8 52% $     153.5 $     101.8 51%
                  
     For the Fourth Quarter For the Full Year of
    Earnings Per Share2021 2020 Change  2021 2020 Change 
    Before and After Restructuring              
    (in millions except Earnings Per Share)             
                  
    Average Fully Diluted Shares Outstanding47.0 46.8 0% 47.0 46.7 1%
                  
    Fully Diluted Earnings Per Share ("EPS") Reported$       0.85 $       0.57 49% $       3.25 $       2.14 52%
                  
    Restructuring Per Share, net of tax$0.01 $-    $      0.01 $      0.04   
                  
    Fully Diluted EPS before Restructuring$       0.86 $       0.57 51% $       3.26 $       2.18 50%
                  


    Key Performance Indicators: Net Sales Summary

     Net Sales For the Fourth Quarter
     United States Latin Europe, Middle Asia Total        
    (in millions)& Canada America East & Africa Pacific Water Fueling Distribution Other/ElimsConsolidated 
                      
    Q4 2020$94.1 $36.0 $41.3 $17.9 $189.3 $65.5 $77.9 ($11.6)$321.1 
    Q4 2021$148.9 $36.6 $47.3 $25.2 $258.0 $79.0 $116.9 ($21.4)$432.5 
    Change$54.8 $0.6 $6.0 $7.3 $68.7 $13.5 $39.0 ($9.8)$111.4 
    % Change58%2%15%41%36%21%50% 35%
                      
    Foreign currency translation$0.6 ($2.3) ($4.5) ($0.1) ($6.3) ($0.3) $0.0    
    % Change1%-6% -11% -1% -3% 0%0%   
                      
    Acquisitions$29.6 $0.0 $0.0 $1.9 $31.5 $0.0 $8.5    
                      
    Volume/Price$24.6 $2.9 $10.5 $5.5 $43.5 $13.8 $30.5    
    % Change26%8%25%31%23%21%39%   
                      


     Net Sales For the Full Year
     United States Latin Europe, Middle Asia Total        
    (in millions)& Canada America East & Africa Pacific Water Fueling Distribution Other/ElimsConsolidated 
                      
    FY 2020$388.5 $118.5 $156.8 $70.9 $734.7 $245.1 $328.4 ($60.9)$1,247.3 
    FY 2021$549.2 $139.5 $189.8 $85.1 $963.6 $289.1 $497.6 ($88.4)$1,661.9 
    Change$160.7 $21.0 $33.0 $14.2 $228.9 $44.0 $169.2 ($27.5)$414.6 
    % Change41%18%21%20%31%18%52% 33%
                      
    Foreign currency translation$4.0 ($8.5) ($1.7) $1.7 ($4.5) $2.2 $0.0    
    % Change1%-7% -1% 2%-1% 1%0%   
                      
    Acquisitions$94.3 $0.0 $0.0 $2.4 $96.7 $0.0 $53.1    
                      
    Volume/Price$62.4 $29.5 $34.7 $10.1 $136.7 $41.8 $116.1    
    % Change16%25%22%14%19%17%35%   
                      


    Key Performance Indicators: Operating Income and Margin Summary

    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 Sales14.1%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 Restructuring14.2%28.1%4.8%  11.0%
               
               
    Operating Income and Margins           
    (in millions)For the Fourth Quarter 2020
     Water Fueling Distribution Other/Elims Consolidated 
    Operating Income / (Loss)$          30.4 $          18.8 $            0.5 $        (15.3)$          34.4 
    % Operating Income To Net Sales16.1%28.7%0.6%  10.7%
               
    Restructuring$            0.3 $- $- $- $            0.3 
               
    Operating Income/(Loss) before Restructuring$          30.7 $          18.8 $            0.5 $        (15.3)$          34.7 
    % Operating Income to Net Sales Before Restructuring16.2%28.7%0.6%  10.8%
               


    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 Sales14.4%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 Before Restructuring14.5%27.5%7.2%  11.4%
               
               
    Operating Income and Margins           
    (in millions)For the Full Year of 2020
     Water Fueling Distribution Other/Elims Consolidated 
    Operating Income / (Loss)$        114.4 $          63.4 $          11.5 $        (58.8)$        130.5 
    % Operating Income To Net Sales15.6%25.9%3.5%  10.5%
               
    Restructuring$            2.3 $            0.1 $            0.1 $- $            2.5 
               
    Operating Income/(Loss) before Restructuring$        116.7 $          63.5 $          11.6 $        (58.8)$        133.0 
    % Operating Income to Net Sales Before Restructuring15.9%25.9%3.5%  10.7%
               

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