Franklin Electric Reports Fourth Quarter 2024 and Full Year 2024 Results

Rhea-AI Summary

Franklin Electric (FELE) reported Q4 2024 net sales of $485.7 million, up 3% from Q4 2023, with Energy Systems and Distribution segments growing 5% and 6% respectively. Q4 operating income was $43.0 million with an 8.9% margin, and EPS was $0.72.

For full-year 2024, consolidated net sales decreased 2% to $2.0 billion, with Distribution segment growing 2% while Water Systems and Energy Systems declined 2% and 8% respectively. Operating income was $243.6 million with a 12.1% margin, and full-year EPS was $3.86.

The company ended 2024 with a cash balance of $220.5 million, generating operating cash flows of $261.4 million. For 2025, FELE expects sales between $2.09-2.15 billion and EPS of $4.05-4.25.

Positive

• Q4 2024 net sales increased 3% to $485.7 million
• Energy Systems and Distribution segments showed growth of 5% and 6% respectively in Q4
• Cash balance increased by $135.5 million to $220.5 million
• Strong operating cash flow of $261.4 million
• Positive 2025 guidance with expected sales growth and EPS improvement

Negative

• Full-year 2024 net sales declined 2% to $2.0 billion
• Q4 2024 EPS decreased to $0.72 from $0.82 in Q4 2023
• Full-year 2024 EPS declined to $3.86 from $4.11 in 2023
• Operating income decreased to $243.6 million from $262.4 million in 2023
• Water Systems and Energy Systems segments showed annual declines of 2% and 8%

Insights

Financial Analyst

Franklin Electric's Q4 2024 performance reveals a company successfully navigating challenging market conditions while positioning for future growth. The 3% revenue growth to $485.7 million in Q4, despite macroeconomic headwinds, demonstrates resilient demand across key segments.

The standout performer was the newly rebranded Energy Systems segment, achieving record Q4 operating income of $24.7 million with an impressive 35.9% operating margin. This rebranding from Fueling Systems signals a strategic pivot toward broader energy markets, potentially opening new revenue streams beyond traditional fueling applications.

Working capital management has been particularly strong, with operating cash flow of $261.4 million supporting a robust cash position of $220.5 million. This financial flexibility provides significant firepower for the company's growth initiatives and potential acquisitions in 2025.

The 2025 guidance of $2.09-2.15 billion in revenue and EPS of $4.05-4.25 suggests management's confidence in growth resumption, supported by improving order trends and recent acquisitions. The guidance implies revenue growth of 4.5-7.5%, indicating potential market share gains and successful execution of growth strategies.

However, margin pressure remains a concern, with Q4 operating margin contracting to 8.9% from 10.7%. This suggests ongoing challenges in cost management and pricing power, though productivity initiatives mentioned by management could help address these pressures in 2025.

Fourth Quarter 2024 Highlights

• Consolidated net sales of $485.7 million, an increase of 3% to the prior year
• Energy Systems and Distribution net sales increased 5% and 6%, respectively, while Water Systems net sales were flat
• Operating income was $43.0 million with operating margin of 8.9%
• GAAP fully diluted earnings per share (EPS) was $0.72

Full Year 2024 Highlights

• Consolidated net sales of $2.0 billion, a decrease of 2% to the prior year
• Distribution net sales increased 2%, while Water Systems and Energy Systems net sales decreased 2% and 8%, respectively
• Operating income was $243.6 million with operating margin of 12.1%
• GAAP fully diluted earnings per share (EPS) was $3.86
• Cash flows from operating activities were $261.4 million

FORT WAYNE, Ind., Feb. 18, 2025 (GLOBE NEWSWIRE) -- Franklin Electric Co., Inc. today announced its fourth quarter and full year financial results for fiscal year 2024.

Fourth quarter 2024 net sales were $485.7 million, compared to fourth quarter 2023 net sales of $473.0 million. Fourth quarter 2024 operating income was $43.0 million, compared to fourth quarter 2023 operating income of $50.8 million. Fourth quarter 2024 EPS was $0.72, versus EPS in the fourth quarter 2023 of $0.82.

Full year 2024 net sales were $2.0 billion, compared to full year 2023 net sales of $2.1 billion. Full year 2024 operating income was $243.6 million, compared to full year 2023 operating income of $262.4 million. Full year 2024 EPS was $3.86, versus EPS in the full year 2023 of $4.11.

“The fourth quarter marked a solid finish to a challenging year. Our results were driven by strong performance in our newly renamed Energy Systems segment. While we have worked through the elevated post-COVID backlogs at this time, underlying demand remains healthy, and we continue to execute on productivity initiatives as we align our businesses with the more normalized environment,” commented Joe Ruzynski, Franklin Electric’s CEO.

“Our resiliency is supported by the breadth of our global portfolio, which has proven to be a strategic asset as we closed out a year shaped by macroeconomic pressures. Order trends have improved, and with the support of a very healthy balance sheet, we are well-positioned to capitalize on opportunities in the year ahead. In 2025, our focus turns to driving revenue growth and margin expansion as we accelerate innovation and growth,” concluded Mr. Ruzynski.

Segment Summaries

Water Systems net sales were $279.6 million in the fourth quarter, flat compared to the fourth quarter 2023. Results were driven by higher sales of groundwater products, water treatment products and all other surface products. These sales increases were offset by lower sales of large dewatering pumps, which had a record fourth quarter last year. Water Systems operating income in the fourth quarter 2024 was $35.6 million. Fourth quarter 2023 Water Systems operating income was $44.1 million.

Distribution net sales were $157.2 million, an increase of $9.2 million or 6 percent compared to the fourth quarter 2023. Sales increases were driven by higher volumes and the incremental impact from a recent acquisition. The Distribution segment operating income in the fourth quarter 2024 was $0.5 million. Fourth quarter 2023 Distribution operating income was $1.0 million.

Energy Systems net sales were $68.8 million in the fourth quarter 2024, an increase of $3.1 million or 5 percent compared to the fourth quarter 2023. Sales increases were driven by higher volumes and price realization. Energy Systems operating income in the fourth quarter 2024 was a record for any fourth quarter at $24.7 million. Fourth quarter 2023 Energy Systems operating income was $19.4 million. The Company has changed the name of the Fueling Systems segment to Energy Systems to reflect its diverse portfolio and growth strategy, as well as to better reflect the markets and customers served by the segment.

Cash Flow

The Company ended 2024 with a cash balance of $220.5 million, an increase of $135.5 million compared to the end of 2023. Net cash flows from operating activities for 2024 were $261.4 million versus $315.7 million in the same period in 2023. Cash flow in 2023 benefitted from actions the Company took to improve working capital including inventory reductions as its supply chain resiliency and lead times improved during the year.

2024 Guidance

The Company expects its full year 2025 sales including the impact of its recently announced acquisitions to be in the range of $2.09 billion to $2.15 billion and full year 2025 EPS to be in the range of $4.05 to $4.25.

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 2024 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/9jnstij5

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/BI4b232e4ceea6435ba8f046e92e18e563

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 18, 2025, through 9:00 am ET on Tuesday, February 25, 2025, 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, 2023, 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 2024 and America’s Climate Leaders 2024 by USA Today.

Franklin Electric Contact:

Jeffery L. Taylor
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,
	2024				2023				2024				2023
Net sales	$	485,745			$	472,970			$	2,021,341			$	2,065,133
Cost of sales		321,505				312,961				1,304,061				1,368,125
Gross profit		164,240				160,009				717,280				697,008
Selling, general, and administrative expenses		117,846				108,825				470,136				433,476
Restructuring expense		3,360				356				3,499				1,091
Operating income		43,034				50,828				243,645				262,441
Interest expense		(1,339	)			(1,481	)			(6,319	)			(11,790	)
Other income, net		630				1,831				1,339				3,696
Foreign exchange expense, net		(1,590	)			(4,026	)			(6,818	)			(12,124	)
Income before income taxes		40,735				47,152				231,847				242,223
Income tax expense		6,443				8,322				50,238				47,489
Net income	$	34,292			$	38,830			$	181,609			$	194,734
Less: Net income attributable to noncontrolling interests		(637	)			(281	)			(1,300	)			(1,462	)
Net income attributable to Franklin Electric Co., Inc.	$	33,655			$	38,549			$	180,309			$	193,272
Income per share:
Basic	$	0.73			$	0.83			$	3.92			$	4.17
Diluted	$	0.72			$	0.82			$	3.86			$	4.11

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
	December 31,				December 31,
	2024				2023
ASSETS
Cash and cash equivalents	$	220,540			$	84,963
Receivables (net)		226,826				222,418
Inventories		483,875				508,696
Other current assets		32,950				37,718
Total current assets		964,191				853,795
Property, plant, and equipment, net		223,566				229,739
Lease right-of-use Assets, net		62,637				57,014
Goodwill and other assets		570,212				587,574
Total assets	$	1,820,606			$	1,728,122
LIABILITIES AND EQUITY
Accounts payable	$	157,046			$	152,419
Accrued expenses and other current liabilities		139,989				104,949
Current lease liability		18,878				17,316
Current maturities of long-term debt and short-term borrowings		117,814				12,355
Total current liabilities		433,727				287,039
Long-term debt		11,622				88,056
Long-term lease liability		43,304				38,549
Income taxes payable non-current		-				4,837
Deferred income taxes		10,193				29,461
Employee benefit plans		29,808				35,973
Other long-term liabilities		22,118				33,914
Redeemable noncontrolling interest		1,224				1,145
Total equity		1,268,610				1,209,148
Total liabilities and equity	$	1,820,606			$	1,728,122

FRANKLIN ELECTRIC CO., INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
	2024				2023
Cash flows from operating activities:
Net income	$	181,609			$	194,734
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization		56,073				52,260
Non-cash lease expense		21,438				18,852
Share-based compensation		12,061				10,133
Other		(13,327	)			10,259
Changes in assets and liabilities:
Receivables		(17,045	)			19,150
Inventory		10,889				48,176
Accounts payable and accrued expenses		15,285				(23,085	)
Operating leases		(21,129	)			(18,874	)
Income taxes-U.S. Tax Cuts and Jobs Act		(3,870	)			(2,902	)
Other		19,369				7,007
Net cash flows from operating activities		261,353				315,710
Cash flows from investing activities:
Additions to property, plant, and equipment		(41,682	)			(41,415	)
Proceeds from sale of property, plant, and equipment		1,182				1,494
Acquisitions and investments		(5,201	)			(34,831	)
Other investing activities		73				463
Net cash flows from investing activities		(45,628	)			(74,289	)
Cash flows from financing activities:
Net change in debt		29,235				(115,529	)
Proceeds from issuance of common stock		7,204				9,193
Purchases of common stock		(61,041	)			(43,332	)
Dividends paid		(46,876	)			(41,723	)
Deferred payments for acquisitions		(2,591	)			(802	)
Net cash flows from financing activities		(74,069	)			(192,193	)
Effect of exchange rate changes on cash		(6,079	)			(10,055	)
Net change in cash and cash equivalents		135,577				39,173
Cash and cash equivalents at beginning of period		84,963				45,790
Cash and cash equivalents at end of period	$	220,540			$	84,963

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			Energy**			Distribution			Other/Elims			Consolidated
Q4 2023	$161.2			$46.6			$45.5			$26.3			$279.6			$65.7			$148.0			($20.3		)	$473.0
Q4 2024	$158.5			$44.3			$49.7			$27.1			$279.6			$68.8			$157.2			($19.9		)	$485.7
Change	($2.7		)	($2.3		)	$4.2			$0.8			$0.0			$3.1			$9.2			$0.4			$12.7
% Change		-2	%		-5	%		9	%		3	%		0	%		5	%		6	%					3	%
Foreign currency translation, net*	($0.4		)	($5.5		)	($0.8		)	($0.8		)	($7.5		)	$0.0			$0.0						($7.5		)
% Change		0	%		-12	%		-2	%		-3	%		-3	%		0	%		0	%					2	%
Acquisitions	$3.1			$0.0			$0.0			$0.0			$3.1			$0.0			$4.0						$7.1
% Change		2	%		0	%		0	%		0	%		1	%		0	%		3	%					2	%
Volume/Price	($5.4		)	$3.2			$5.0			$1.6			$4.4			$3.1			$5.2			$0.4			$13.1
% Change		-3	%		7	%		11	%		6	%		2	%		5	%		4	%		-2	%		3	%

	Net Sales For the Full Year
	United States			Latin			Europe, Middle			Asia			Total
(in millions)	& Canada			America			East & Africa			Pacific			Water			Energy**			Distribution			Other/Elims			Consolidated
FY 2023	$744.4			$174.2			$198.3			$86.8			$1,203.7			$296.5			$673.3			($108.4		)	$2,065.1
FY 2024	$708.5			$170.9			$211.4			$93.2			$1,184.0			$273.7			$685.5			($121.9		)	$2,021.3
Change	($35.9		)	($3.3		)	$13.1			$6.4			($19.7		)	($22.8		)	$12.2			($13.5		)	($43.8		)
% Change		-5	%		-2	%		7	%		7	%		-2	%		-8	%		2	%					-2	%
Foreign currency translation, net*	($0.9		)	($9.7		)	($6.3		)	($2.4		)	($19.3		)	$0.0			$0.0						($19.3		)
% Change		0	%		-6	%		-3	%		-3	%		-2	%		0	%		0	%					-1	%
Acquisitions	$17.6			$0.0			$0.0			$0.0			$17.6			$0.0			$17.1						$34.7
% Change		2	%		0	%		0	%		0	%		1	%		0	%		3	%					2	%
Volume/Price	($52.6		)	$6.4			$19.4			$8.8			($18.0		)	($22.8		)	($4.9		)	($13.5		)	($59.2		)
% Change		-7	%		4	%		10	%		10	%		-1	%		-8	%		-1	%		12	%		-3	%

*The Company has presented local currency price increases used to offset currency devaluation in the Argentina and Turkey hyperinflationary economies within the foreign currency translation, net row above.
** Recognizing the Company’s diverse portfolio and growth strategy, it renamed its Fueling Systems segment to Energy Systems to better reflect the markets and customers served by this business.

Key Performance Indicators: Operating Income and Margin Summary

Operating Income and Margins
(in millions)	For the Fourth Quarter 2024
	Water			Energy			Distribution			Other/Elims			Consolidated
Operating Income / (Loss)	$	35.6		$	24.7		$	0.5		$	(17.8	)	$	43.0
% Operating Income To Net Sales		12.7	%		35.9	%		0.3	%					8.9	%
Operating Income and Margins
(in millions)	For the Fourth Quarter 2023
	Water			Energy			Distribution			Other/Elims			Consolidated
Operating Income / (Loss)	$	44.1		$	19.4		$	1.0		$	(13.7	)	$	50.8
% Operating Income To Net Sales		15.8	%		29.5	%		0.7	%					10.7	%
Operating Income and Margins
(in millions)	For the Full Year of 2024
	Water			Energy			Distribution			Other/Elims			Consolidated
Operating Income / (Loss)	$	197.9		$	93.6		$	24.3		$	(72.2	)	$	243.6
% Operating Income To Net Sales		16.7	%		34.2	%		3.5	%					12.1	%
Operating Income and Margins
(in millions)	For the Full Year of 2023
	Water			Energy			Distribution			Other/Elims			Consolidated
Operating Income / (Loss)	$	196.6		$	92.7		$	34.3		$	(61.2	)	$	262.4
% Operating Income To Net Sales		16.3	%		31.3	%		5.1	%					12.7	%

FAQ

What were Franklin Electric's (FELE) Q4 2024 financial results?

FELE reported Q4 2024 net sales of $485.7 million (up 3%), operating income of $43.0 million, and EPS of $0.72.

How did FELE's segments perform in Q4 2024?

Energy Systems sales increased 5%, Distribution grew 6%, while Water Systems remained flat compared to Q4 2023.

What is FELE's financial guidance for 2025?

FELE expects 2025 sales between $2.09-2.15 billion and EPS between $4.05-4.25.

How much operating cash flow did FELE generate in 2024?

FELE generated $261.4 million in operating cash flow during 2024.

What was FELE's full-year 2024 performance?

Full-year 2024 saw net sales of $2.0 billion (down 2%), operating income of $243.6 million, and EPS of $3.86.