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


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     
 

Coordonnées