Attached files
| file | filename |
|---|---|
| 8-K - 8-K - FRANKLIN ELECTRIC CO INC | a201705058-kshareownerspre.htm |
Shareholders Presentation
May 2017
2
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, 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, 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 January 2, 2016, 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.
Earnings Per Share
$1.73
$1.68
$1.41
$1.50
$1.65
$0.00
$0.50
$1.00
$1.50
$2.00
2012 2013 2014 2015 2016
REASONS FOR DECLINE:
• Strong $
• Decline in oil price
• Distribution reset
• Weather
3 GAAP fully diluted
First Quarter 2017 Results
Amounts in millions except share data
1Q 2017 1Q 2016 % +(-) Prior Year
Sales $220.3 $218.4 1%
Operating Income $18.5 $21.1 (12%)
EPS $0.33 $0.28 18%
4
Return on Invested Capital
(ROIC)
21.5%
19.9%
14.5%
12.6%
15.7%
0%
25%
2012 2013 2014 2015 2016
5 ROIC = Operating Income Divided by Average Year-end Net Debt Plus Equity
Cash Flow
$82.9 $82.0
$69.8
$72.9
$78.7
$33.2
$30.9
$13.4
$73.6
$82.3
$0
$25
$50
$75
$100
2012 2013 2014 2015 2016
Net Income Free Cash Flow
6 Free Cash Flow = Operating Cash Flow minus Net Capital Expenditures
23 Consecutive Annual Dividend Payment Increases
7
$-
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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NEW
DISTRIBUTION
SEGMENT
8
2018 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
FUEL
IN
G
2015 2017 2016 W
A
TE
R
Acquisitions
2004
Leverage
(Net Debt/EBITDA)
9
0.59
0.73
0.87
1.18
0.78
1.42
0
1
2
3
4
5
2012 2013 2014 2015 2016 2017 Q2 Forecast
EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization
Borrowing Limit = 3.5
Additional Borrowing Capacity
$300 Million+
Includes Headwater
Acquisitions
Strategic Focus
10
Residential, Agricultural, Commercial Water Systems
$6.0 B Global Market Potential(1)
Complete Fueling Systems
$1.2 B Global Market Potential(1)
(1) Current Franklin management estimates
Strong Brand Franchise
#1 or #2 in
Addressable Markets
Growing Global Footprint
Fragmented
Customer Base
Fragmented
Supply Base
Mission Critical Products
and Systems
Applications with High
Cost of Downtime
Contractors Value
Technical Support
Deep Understanding
of Applications
11
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.
Geographic Expansion
12
13
Global Footprint
Locations with 50+ employees
New sites, Last 5 years
14
US/CANADA
Sales $495
LATIN AMERICA
Sales $138
EMENA
Sales $150
INDIA
Sales $22
ASIA/PACIFIC
Sales $112
SOUTHERN AFRICA
Sales $33
Geographic Expansion
2016 Sales in millions
Sales in Developing Regions
$92
$149
$218
$202
$242
$288
$316
$336
$372 $363 $366
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
($
in
milli
o
n
s)
15
Actual
Sales in Developing Regions
$92
$149
$226 $218
$246
$286
$335
$356
$413
$459
$481
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
($
in
milli
o
n
s)
16
Constant Currency
Product Line Extensions
17
18
Water System Design
19
ELECTRONICS DEVELOPMENT
PUMPS DEVELOPMENT
MOTORS DEVELOPMENT
Drives & Controls
20
Residential Applications
Municipal/Agricultural Applications
Benefits to user:
• Constant pressure
• Better system protection
Benefits to user:
• Better system protection
• Greater efficiency
• Lower total cost of ownership
$200 $100 $500
$2,200 $1,600 $4,200
Drives & Controls
21
Residential Applications
Municipal/Agricultural Applications
Benefits to user:
• Constant pressure
• Better system protection
Benefits to user:
• Better system protection
• Greater efficiency
• Lower total cost of ownership
$200 $100 $500
$2,200 $1,600 $4,200
▶ Leverage our application knowledge and expertise
▶ Focus on system solutions increases our revenue per installation
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Fueling System Design
FUEL MANAGEMENT SYSTEMS
DISPENSING SYSTEMS
PIPE & CONTAINMENT
SUBMERSIBLE PUMPING SYSTEMS
SERVICE STATION HARDWARE
(a) Sales growth excluding the impact of acquisitions for the first twelve months of ownership and the impact of Foreign Exchange.
4.9%
6.8%
7.8%
-7.2%
5.1%
-1.4%
7.1%
5.9%
11.7%
2.1%
5.2%
8.7%
5.4%
6.6%
8.6%
-5.2%
5.1%
0.9%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
Water Fueling Consolidated
Annual Organic Growth(a) Summary – 2012 to 1Q 2017
23
2017 Goal is 5% to 7%
2012 2013 2014 2015 2016 1Q 2017
24
Why Headwater?
Headwater is a direct result of a shared vision
to safeguard the long-term success of
groundwater distribution channels.
Functioning as a holding company and
investment vehicle, The Headwater Companies
will support the continued growth and success
of the entire groundwater industry.
25
2M Company, Inc.
Drillers Service, Inc.
2MDSI/Headwater Wholesale
Western Hydro
• Extend our position in groundwater
• Move closer to contractor
• Opportunities to move into
adjacencies:
– Filtration
– Treatment
– Irrigation
– Commercial
26
Shareholders Presentation
May 2017
2016 Efforts:
– 5 installations spanning
5 different countries
– Impacting nearly 18,000 people
– Leveraged our solar pumping technology
– Communities are already experiencing
increased school enrollment
– Also offered civil work, post-installation
service, and assistance with feeding
programs
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