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

Rhea-AI Summary

Franklin Electric Co. reported record fourth quarter sales of $432.5 million, up 35% from $321.1 million a year earlier. Operating income rose 37% to $47.2 million, with GAAP EPS of $0.85, a new record. Full year 2021 sales reached $1.6619 billion, up 33%, with operating income at $189.2 million, up 45%. GAAP EPS for 2021 was $3.25, a 52% increase from 2020. The company achieved strong growth across all segments, driven by acquisitions and market demand despite supply chain challenges.

Positive

• Record fourth quarter sales of $432.5 million, a 35% increase.
• Operating income of $47.2 million, up 37% year-over-year.
• Record GAAP EPS of $0.85 for the fourth quarter.
• Full year sales of $1.6619 billion, a 33% increase from 2020.
• Full year operating income rose to $189.2 million, a 45% increase.
• GAAP EPS for the full year reached $3.25, a 52% year-over-year increase.

Negative

• Net cash flow from operating activities decreased to $129.8 million from $211.9 million in 2020, due to higher working capital needs.

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 sales	287,332				209,703				1,085,776				814,192
Gross profit	145,188				111,403				576,089				433,139
Selling, general, and administrative expenses	97,741				76,713				386,275				300,122
Restructuring expense	240				317				621				2,506
Operating income	47,207				34,373				189,193				130,511
Interest expense	(1,356		)		(1,131		)		(5,196		)		(4,627		)
Other income/(expense), net	6,447				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
Inventories	449,975				300,932
Other current assets	37,963				27,708
Total current assets	724,647				619,254
Property, plant, and equipment, net	210,654				209,021
Right-of-Use Asset, net	48,379				31,954
Goodwill and other assets	591,485				412,078
Total assets	$	1,575,165			$	1,272,307
LIABILITIES AND EQUITY
Accounts payable	$	164,758			$	95,903
Accrued expenses and other current liabilities	117,955				94,160
Current lease liability	15,320				11,090
Current maturities of long-term debt and short-term borrowings	97,981				2,551
Total current liabilities	396,014				203,704
Long-term debt	90,535				91,966
Long-term lease liability	32,937				20,866
Income taxes payable non-current	11,610				11,965
Deferred income taxes	28,162				25,671
Employee benefit plans	40,696				44,443
Other long-term liabilities	26,568				23,988
Redeemable noncontrolling interest	(19		)		(245		)
Total equity	948,662				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 amortization	44,572				36,488
Non-cash lease expense	13,808				11,699
Share-based compensation	11,731				10,066
Gain from bargain purchase of business	(6,482		)		-
Other	2,126				(1,635		)
Changes in assets and liabilities:
Receivables	(31,925		)		22,053
Inventory	(123,076		)		13,144
Accounts payable and accrued expenses	89,038				20,519
Operating leases	(13,808		)		(11,698		)
Other	(11,196		)		10,061
Net cash flows from operating activities	129,763				211,854
Cash flows from investing activities:
Additions to property, plant, and equipment	(30,116		)		(22,856		)
Proceeds from sale of property, plant, and equipment	979				34
Acquisitions and investments	(235,701		)		(55,915		)
Other investing activities	33				(74		)
Net cash flows from investing activities	(264,805		)		(78,811		)
Cash flows from financing activities:
Net change in debt	94,716				(21,073		)
Proceeds from issuance of common stock	15,524				3,721
Purchases of common stock	(25,949		)		(19,553		)
Dividends paid	(33,398		)		(29,675		)
Net cash flows from financing activities	50,893				(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 period	130,787				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 Restructuring	2021			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 Share	2021			2020			Change			2021			2020			Change
Before and After Restructuring
(in millions except Earnings Per Share)
Average Fully Diluted Shares Outstanding	47.0			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/Elims	Consolidated
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
% Change	58		%	2		%	15		%	41		%	36		%	21		%	50		%		35		%
Foreign currency translation	$	0.6		($2.3)			($4.5)			($0.1)			($6.3)			($0.3)			$	0.0
% Change	1		%	-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
% Change	26		%	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/Elims	Consolidated
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
% Change	41		%	18		%	21		%	20		%	31		%	18		%	52		%		33		%
Foreign currency translation	$	4.0		($8.5)			($1.7)			$	1.7		($4.5)			$	2.2		$	0.0
% Change	1		%	-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
% Change	16		%	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 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 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 Sales	16.1		%	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 Restructuring	16.2		%	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 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 Before Restructuring	14.5		%	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 Sales	15.6		%	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 Restructuring	15.9		%	25.9		%	3.5		%				10.7		%

FAQ

What were Franklin Electric's fourth quarter 2021 sales?

Franklin Electric's fourth quarter 2021 sales were $432.5 million.

How much did Franklin Electric's operating income increase in Q4 2021?

Franklin Electric's operating income increased by 37% to $47.2 million in Q4 2021.

What is the GAAP EPS for Franklin Electric in Q4 2021?

The GAAP fully diluted earnings per share (EPS) for Franklin Electric in Q4 2021 was $0.85.

What were the total sales for Franklin Electric in 2021?

Franklin Electric's total sales for 2021 were $1.6619 billion.

What is the earnings per share forecast for Franklin Electric in 2022?

Franklin Electric expects its earnings per share for 2022 to be between $3.50 and $3.75.