Franklin Electric Co., Inc. · NASDAQ:FELE
Franklin Electric — Investor Presentation (August 2023)
24 slides from Franklin Electric's investor presentation, August 2023
Slide 1: Investor Presentation
Investor Presentation Gregg Sengstack, Chairperson and CEO Jeff Taylor, VP – Chief Financial Officer August 2023
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT: "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, invento
Slide 3: Strategic Focus
STRATEGIC FOCUS: To grow as a global provider of water and fuel systems, through geographic expansion and product line extensions, leveraging our global platform and competency in system design. 3
Slide 4: Investment Highlights
Investment Highlights 1 Leading market position in groundwater pumping systems Track record of consistent organic growth across segments Advantageous global footprint to extend leadership and capture revenue in developing markets Strong balance sheet with net debt-to-EBITDA ~0.6x and opportunity for
Slide 5: Franklin Electric Segment Overview (Revenue FY 2022)
Franklin Electric Segment Overview (Revenue FY 2022) WATER SYSTEMS DISTRIBUTION FUELING SYSTEMS $1,158M (54%) $668M (31%) $334M (15%) CONDENSATE & OTHER INDUSTRIAL 17% GROUNDWATER WATER 51% WELL FUELING LARGE SYSTEMS DEWATERING 12% DRILLING WASTEWATER ACCESSORIES WATER TREATMENT GREYWATER COMMERCIAL
Slide 6: Performance by Segment
Performance by Segment1,2,3 WATER SYSTEMS DISTRIBUTION FUELING SYSTEMS ⁴ NET SALES GROWTH NET SALES GROWTH NET SALES GROWTH Q2 2023 YoY Q2 2023 YoY Q2 2023 YoY $321.7M up 4% $193.1M up 1% $80.4M down 7% (8% organic growth) (1% organic growth) (-6% organic growth) First Half 2023 YoY First Half 2023
Slide 7: Global Presence & Opportunity
Global Presence & Opportunity On a daily basis, the world uses… ~3 Trillion gallons of fresh water ~1 Billion gallons of fuel To meet this demand, Franklin Electric produces 20,000 pumps, motors, drives, and controls daily Global footprint ~6,500 employees ~20 countries 6 continents Franklin Electri
Slide 8: Water Systems
Water Systems WATER SYSTEMS Water treatment brands acquired Residential, agricultural, municipal and industrial applications Water Treatment • High fragmentation of water treatment providers in North America driving organic and inorganic growth Headwater Distribution • Five acquisitions since 3Q’201
Slide 9: Fueling Systems
Fueling Systems FUELING SYSTEMS Advantageous Position in Transitioning Market Leader in fuel pumping, containment, and monitoring and control systems Fuel Systems • Advances in petroleum piping and containment systems, electronic leak detection and overfill protection enable providers to safely keep
Slide 10: Corporate Stewardship
Corporate Stewardship Our Vision Our Goal To be an indispensable partner to our customers To accomplish these objectives in ways that deliver value to our customers and shareholders Commitment to Safety Operational Integrity Promote a culture of continuous health and safety training Ensuring proper
Slide 11: Strategic Priorities
Strategic Priorities • Customer-focused innovation Continue to drive organic • Enhance position in industrial channel • 10 year Developing Region Growth CAGR of 7% growth • Drive synergies through the entire U.S. Groundwater Pro channel Maintain competitive • Extend leadership position via quality,
Slide 12: Capital Allocation Performance & Priorities
Capital Allocation Performance & Priorities Priorities for Cash Deployment Share Opportunistic approach to acquisitions Repurchases 15% CAPEX 1 with >$700M in deal capacity (a) 27% Reinvestment in business to drive Dividends 18% 2007 – 2022 2 organic growth FCF Deployment 3 Dividends paid CAGR of 9%
Slide 13: Acquisitions are a critical engine for growth
Acquisitions are a critical engine for growth Key Priorities Outcomes More FELE-branded products in Product Line Extensions distribution Geographic Expansion New platforms and bolt-ons to extend reach Criteria Demonstrated ability to grow and drive incremental operating margins Focus on risk adj
Slide 14: Financial Performance Summary
Financial Performance Summary 14
Slide 15: Financial Performance Summary
Financial Performance Summary2 Consolidated Sales ($M) $1,662 $2,044 12% 16% $1,298 $1,315 $1,247 NET REVENUE EPS CAGR CAGR FY2018-2022 FY2018-2022 2018 2019 2020 2021 2022 EPS $3.25 $3.97 16.4% $2.23 $2.14 ROIC 1 $2.03 2022 2018 2019 2020 2021 2022 1ROIC based on after-tax calculation 2Non-GAAP fin
Slide 16: Cash Generation & Returns
Cash Generation & Returns⁴ Net Income ($M) Free Cash Flow ($M)1 $189 $189 $155 $156 $106 $101 $107 $101 $96 $60 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Free Cash Flow Conversion ROIC2 187% 163% 16.4% 13.8% 12.2% 12.0% 12.6% 101% 65% 32% 2018 2019 2020 20213 2022 3 2018 2019 2020 2021 2022
Slide 17: Organic Sales Growth
Organic Sales Growth 1,2 Water Fueling Distribution 40.0% 35.4% 30.0% 21.5% 18.6% 19.6% 20.0% 17.1% 17.4% 15.0% 12.5% 10.0% 8.1% 3.1% 3.5% 0.1% 0.0% -0.1% -2.5% -10.0% -20.0% -16.7% 2018 2019 2020 2021 2022 1 Excludes acquisitions for one year and the impact of foreign currency translation. ²Non-GAA
Slide 18: Non-GAAP Reconciliations
Non-GAAP Reconciliations 18
Slide 19: Non-GAAP Reconciliations
Non-GAAP Reconciliations To supplement Franklin Electric’s consolidated financial statements presented on a U.S. GAAP basis, the company discloses certain non-GAAP financial measures. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United
Slide 20: Reconciliation of Non-GAAP Financial Measure: Net Debt to Adjusted EBITDA
Reconciliation of Non-GAAP Financial Measure Net Debt to Adjusted EBITDA $ In millions As of June 30, 2023 Total debt 248.5 Less: cash and cash equivalents (53.2) Net debt 195.3 Six months ended Year ended Six months ended Twelve months ended June 30, 2023 December 31, 2022 June 30, 2022 June 30, 20
Slide 21: Reconciliation: Operating Cash Flow to Free Cash Flow
Reconciliation of Non-GAAP Financial Measure Operating Cash Flow to Free Cash Flow $ in thousands 2022 2021 2020 2019 2018 Cash flows from operating activities 101,674 129,763 211,854 177,676 128,435 Cash flows from investing activities (43,074) (264,805) (78,811) (41,806) (66,292) Cash flows from f
Slide 22: Reconciliation: Reported Sales Growth to Organic Sales Growth
Reconciliation of Non-GAAP Financial Measure Reported Sales Growth to Organic Sales Growth Net Sales Organic Net Sales Organic Growth % Growth Growth % Growth as Reported Acquisitions % FX % %* as Reported Acquisitions % FX % %* Q2 2023 2021 Water 4 - 4 8 Water 31 (13) 1 19 Fueling (7) - - (6) Fueli
Slide 23: Return on Invested Capital (ROIC)
Reconciliation of Non-GAAP Financial Measure Return on Invested Capital (ROIC) $ In millions Net Operating Income After Tax 2022 2021 2020 2019 2018 Operating income $ 257.2 $ 189.2 $ 130.5 $ 127.1 $ 132.0 Income tax on operating income 54.0 37.8 27.9 25.6 24.7 Net operating income after tax (A) $ 2
Slide 24: For More Information
For More Information: Jeff Taylor, VP – CFO, Franklin Electric Co. Inc. [email protected]. 260-827-5520 24
Franklin Electric — Investor Presentation (August 2023) on 6ix