Franklin Electric Reports Fourth Quarter 2023 and Full Year 2023 Results
- None.
- Fueling Systems net sales decreased by 23% in the fourth quarter 2023.
- Distribution segment operating income decreased from $2.9 million in the fourth quarter 2022 to $1.0 million in the fourth quarter 2023.
- Fueling Systems operating income decreased from $24.3 million in the fourth quarter 2022 to $19.4 million in the fourth quarter 2023.
Insights
The reported decrease in fourth quarter consolidated net sales by 3% juxtaposed with a full year increase of 1% indicates a mixed financial performance for Franklin Electric Co., Inc. The decline in Fueling Systems sales by 23% is particularly notable and may be attributed to a combination of external factors such as higher interest rates, labor constraints and permitting delays, as well as internal factors like customer inventory adjustments. This decline is significant as it suggests potential challenges in the fueling industry segment, which investors should monitor closely.
The record cash flows from operating activities, which saw an increase of over $200 million from the previous year, reflect strong working capital management and improved supply chain resilience. This is a positive indicator of the company's operational efficiency and could be a signal of robust financial health to stakeholders.
Looking ahead, the provided guidance for 2024 with expected sales ranging from $2.10 billion to $2.17 billion and EPS between $4.22 and $4.40 suggests management's confidence in the company's growth trajectory. However, investors should consider the potential volatility in commodity prices and the impact of ongoing global economic uncertainties on the company's performance.
The operating margin of 10.7% for Q4 and 12.7% for the full year, alongside the 4% increase in full year EPS, indicates that Franklin Electric has been able to maintain profitability despite the sales decrease in the fourth quarter. This could be indicative of effective cost control measures and pricing strategies in place. However, the contrast between the Water Systems and Distribution segments setting new sales records and the Fueling Systems' significant sales decrease highlights divergent sectoral trends within the company's portfolio.
Market dynamics such as adverse weather conditions and margin compression due to declining pricing of commodity-based products have affected the Distribution segment. These factors, coupled with the current economic climate, could influence the company's strategic decisions, such as inventory management and cost optimization efforts.
The emphasis on the company's resilience and the anticipation of increased demand as the year progresses reflect an optimistic outlook. Nevertheless, stakeholders should assess the company's ability to navigate market fluctuations, especially in the Fueling Systems segment and its potential impact on overall performance.
The 23% decrease in Fueling Systems net sales is a critical aspect to analyze within the energy sector. This decline could be symptomatic of broader trends, such as the transition towards alternative energy sources and electric vehicles, which may be influencing the demand for traditional fueling infrastructure. Investors should consider the long-term implications of such market shifts on the company's Fueling Systems segment.
Furthermore, the company's mention of customer requirements for water and energy solutions points to a strategic focus on diversifying its product offerings to cater to evolving industry needs. This approach could mitigate risks associated with the Fueling Systems downturn and capitalize on emerging opportunities in the energy solutions space.
Given the company's global portfolio, it is also essential to consider geopolitical factors and regulatory changes that may impact the energy sector, particularly in fueling systems. The company's ability to adapt to these changes and maintain a competitive edge will be crucial for its future performance.
Fourth Quarter 2023 Highlights
- Consolidated net sales of
$473.0 million , a decrease of3% to the prior year - Water Systems and Distribution net sales decreased by
1% each, while Fueling Systems net sales decreased23% - Operating income was
$50.8 million with operating margin of10.7% - GAAP fully diluted earnings per share (EPS) was
$0.82
Full Year 2023 Highlights
- Full Year record net sales of
$2.1 billion , an increase of1% over the prior year - Water Systems and Distribution both set new net sales records with increases of
4% and1% , respectively, while Fueling Systems net sales decreased11% - Operating income for 2023 was a record at
$262.4 million with operating margin of12.7% - GAAP fully diluted EPS was a record at
$4.11 , an increase of4% over the prior year - Record cash flows from operating activities of
$315.7 million increased$214.0 million over the prior year
FORT WAYNE, Ind., Feb. 13, 2024 (GLOBE NEWSWIRE) -- Franklin Electric Co., Inc. today announced its fourth quarter and full year financial results for fiscal year 2023.
Fourth quarter 2023 net sales were
Full Year 2023 net sales were
“The Franklin Electric team delivered another solid quarter to end a record year overall for the Company with new full year records for net sales, operating income, earnings per share, and operating cash flows. Strong execution drove healthy margins for both the quarter and year, led by record full-year operating income in our Water Systems segment while commodity price headwinds in our Distribution business and destocking activity in Fueling continued to weigh on our results,” commented Gregg Sengstack, Franklin Electric’s Chairperson and Chief Executive Officer.
“The breadth and durability of our global portfolio has proven resilient and positions us well entering 2024 where we expect demand to gain momentum as we move further into the year. I’m confident our healthy financial position and commitment to remain focused on meeting our customers’ growing requirements for water and energy solutions provides a solid foundation to enhance shareholder value”, concluded Mr. Sengstack.
Segment Summaries
Water Systems net sales were
Distribution net sales were
Fueling Systems net sales were
Cash Flow
Net cash flows from operating activities for 2023 were
2024 Guidance
The Company expects its full year 2024 sales to be in the range of
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 2023 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/y88zfrpv
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/BI7028d9118f904de0860c8fee5c50244a
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 13, 2024, through 9:00 am ET on Tuesday, February 20, 2024, 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, 2022, 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 energy. 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 is proud to be named in Newsweek’s lists of America’s Most Responsible Companies and Most Trustworthy Companies for 2023 and America’s Climate Leaders 2023 by USA Today.
Franklin Electric Contact:
Sandy Statzer
Franklin Electric Co., Inc.
InvestorRelations@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, | ||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net sales | $ | 472,970 | $ | 489,431 | $ | 2,065,133 | $ | 2,043,711 | |||||||
| Cost of sales | 312,961 | 323,213 | 1,368,125 | 1,352,276 | |||||||||||
| Gross profit | 160,009 | 166,218 | 697,008 | 691,435 | |||||||||||
| Selling, general, and administrative expenses | 108,825 | 109,724 | 433,476 | 432,076 | |||||||||||
| Restructuring expense | 356 | 272 | 1,091 | 2,170 | |||||||||||
| Operating income | 50,828 | 56,222 | 262,441 | 257,189 | |||||||||||
| Interest expense | (1,481 | ) | (4,033 | ) | (11,790 | ) | (11,525 | ) | |||||||
| Other income/(expense), net | 1,831 | (414 | ) | 3,696 | (3,201 | ) | |||||||||
| Foreign exchange expense | (4,026 | ) | (2,946 | ) | (12,124 | ) | (7,236 | ) | |||||||
| Income before income taxes | 47,152 | 48,829 | 242,223 | 235,227 | |||||||||||
| Income tax expense | 8,322 | 8,872 | 47,489 | 46,416 | |||||||||||
| Net income | $ | 38,830 | $ | 39,957 | $ | 194,734 | $ | 188,811 | |||||||
| Less: Net income attributable to noncontrolling interests | (281 | ) | (378 | ) | (1,462 | ) | (1,479 | ) | |||||||
| Net income attributable to Franklin Electric Co., Inc. | $ | 38,549 | $ | 39,579 | $ | 193,272 | $ | 187,332 | |||||||
| Income per share: | |||||||||||||||
| Basic | $ | 0.83 | $ | 0.85 | $ | 4.17 | $ | 4.02 | |||||||
| Diluted | $ | 0.82 | $ | 0.84 | $ | 4.11 | $ | 3.97 | |||||||
| FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES | |||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| (Unaudited) | |||||
| (In thousands) | |||||
| December 31, | December 31, | ||||
| 2023 | 2022 | ||||
| ASSETS | |||||
| Cash and equivalents | $ | 84,963 | $ | 45,790 | |
| Receivables (net) | 222,418 | 230,404 | |||
| Inventories | 508,696 | 544,980 | |||
| Other current assets | 37,718 | 36,916 | |||
| Total current assets | 853,795 | 858,090 | |||
| Property, plant, and equipment, net | 229,739 | 215,154 | |||
| Lease right-of-use assets, net | 57,014 | 48,948 | |||
| Goodwill and other assets | 587,574 | 572,009 | |||
| Total assets | $ | 1,728,122 | $ | 1,694,201 | |
| LIABILITIES AND EQUITY | |||||
| Accounts payable | $ | 152,419 | $ | 139,266 | |
| Accrued expenses and other current liabilities | 104,949 | 123,788 | |||
| Current lease liability | 17,316 | 15,959 | |||
| Current maturities of long-term debt and | |||||
| short-term borrowings | 12,355 | 126,756 | |||
| Total current liabilities | 287,039 | 405,769 | |||
| Long-term debt | 88,056 | 89,271 | |||
| Long-term lease liability | 38,549 | 32,858 | |||
| Income taxes payable non-current | 4,837 | 8,707 | |||
| Deferred income taxes | 29,461 | 29,744 | |||
| Employee benefit plans | 35,973 | 31,889 | |||
| Other long-term liabilities | 33,914 | 25,209 | |||
| Redeemable noncontrolling interest | 1,145 | 620 | |||
| Total equity | 1,209,148 | 1,070,134 | |||
| Total liabilities and equity | $ | 1,728,122 | $ | 1,694,201 | |
| FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (Unaudited) | |||||||
| (In thousands) | |||||||
| December 31, | December 31, | ||||||
| 2023 | 2022 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | 194,734 | $ | 188,811 | ||||
| Adjustments to reconcile net income to net cash flows from operating activities: | |||||||
| Depreciation and amortization | 52,260 | 50,374 | |||||
| Non-cash lease expense | 18,852 | 17,406 | |||||
| Share-based compensation | 10,133 | 10,973 | |||||
| Other | 10,259 | 7,291 | |||||
| Changes in assets and liabilities: | |||||||
| Receivables | 19,150 | (44,800 | ) | ||||
| Inventory | 48,176 | (101,080 | ) | ||||
| Accounts payable and accrued expenses | (23,085 | ) | (12,283 | ) | |||
| Operating leases | (18,874 | ) | (17,406 | ) | |||
| Income taxes-U.S. Tax Cuts and Jobs Act | (2,902 | ) | (355 | ) | |||
| Other | 7,007 | 2,743 | |||||
| Net cash flows from operating activities | 315,710 | 101,674 | |||||
| Cash flows from investing activities: | |||||||
| Additions to property, plant, and equipment | (41,415 | ) | (41,903 | ) | |||
| Proceeds from sale of property, plant, and equipment | 1,494 | 6 | |||||
| Acquisitions and investments | (34,831 | ) | (1,186 | ) | |||
| Other investing activities | 463 | 9 | |||||
| Net cash flows from investing activities | (74,289 | ) | (43,074 | ) | |||
| Cash flows from financing activities: | |||||||
| Net change in debt | (115,529 | ) | 28,936 | ||||
| Proceeds from issuance of common stock | 9,193 | 3,859 | |||||
| Purchases of common stock | (43,332 | ) | (40,490 | ) | |||
| Dividends paid | (41,723 | ) | (36,991 | ) | |||
| Deferred payments for acquisitions | (802 | ) | (3,786 | ) | |||
| Net cash flows from financing activities | (192,193 | ) | (48,472 | ) | |||
| Effect of exchange rate changes on cash | (10,055 | ) | (4,874 | ) | |||
| Net change in cash and equivalents | 39,173 | 5,254 | |||||
| Cash and equivalents at beginning of period | 45,790 | 40,536 | |||||
| Cash and equivalents at end of period | $ | 84,963 | $ | 45,790 | |||
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/Elims | Consolidated | |||||||||
| Q4 2022 | ( | ) | ||||||||||||||||
| Q4 2023 | ( | ) | ||||||||||||||||
| Change | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
| % Change | -6 | % | 21 | % | -1 | % | 2 | % | -1 | % | -23 | % | -1 | % | -3 | % | ||
| Foreign currency translation | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
| % Change | 0 | % | -18 | % | -13 | % | 0 | % | -5 | % | 0 | % | 0 | % | -3 | % | ||
| Volume/Price | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| % Change | -6 | % | 39 | % | 12 | % | 2 | % | 4 | % | -23 | % | -1 | % | -23 | % | -1 | % |
| Net Sales For the Full Year | ||||||||||||||||||
| United States | Latin | Europe, Middle | Asia | Total | ||||||||||||||
| (in millions) | & Canada | America | East & Africa | Pacific | Water | Fueling | Distribution | Other/Elims | Consolidated | |||||||||
| FY 2022 | ( | ) | ||||||||||||||||
| FY 2023 | ( | ) | ||||||||||||||||
| Change | ( | ) | ( | ) | ||||||||||||||
| % Change | 4 | % | 9 | % | 3 | % | -6 | % | 4 | % | -11 | % | 1 | % | 1 | % | ||
| Foreign currency translation | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||
| % Change | 0 | % | -14 | % | -12 | % | -4 | % | -5 | % | 0 | % | 0 | % | -3 | % | ||
| Volume/Price | ( | ) | ( | ) | ||||||||||||||
| % Change | 5 | % | 23 | % | 15 | % | -3 | % | 9 | % | -11 | % | 1 | % | -7 | % | 4 | % |
Key Performance Indicators: Operating Income and Margin Summary
| Operating Income and Margins | ||||||||||
| (in millions) | For the Fourth Quarter 2023 | |||||||||
| Water | Fueling | Distribution | Other/Elims | Consolidated | ||||||
| Operating Income / (Loss) | $ | 44.1 | $ | 19.4 | $ | 1.0 | $ | (13.7) | $ | 50.8 |
| % Operating Income To Net Sales | ||||||||||
| 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 | ||||||||||
| Operating Income and Margins | ||||||||||
| (in millions) | For the Full Year of 2023 | |||||||||
| Water | Fueling | Distribution | Other/Elims | Consolidated | ||||||
| Operating Income / (Loss) | $ | 196.6 | $ | 92.7 | $ | 34.3 | $ | (61.2) | $ | 262.4 |
| % Operating Income To Net Sales | ||||||||||
| 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 | ||||||||||
FAQ
What were Franklin Electric's fourth quarter 2023 net sales?
What was the operating income in the fourth quarter 2023?
What were the full year 2023 net sales for Franklin Electric?
What was the full year 2023 operating income?
What were the full year 2023 EPS and how did it compare to the prior year?
