Franklin Electric Co., Inc. · NASDAQ:FELE
Franklin Electric — KeyBanc Investor Conference 2015
36 slides from Franklin Electric's conference presentation, May 27, 2015
Slide 1: KeyBanc Investor Conference May 27, 2015
KeyBanc Investor Conference May 27, 2015
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, inventor
Slide 3: 2014 Sales & Earnings Growth
Water Systems 2014 % +(-) Prior Year $825 M + 8% $124 M (9%) Fueling Systems 2014 % +(-) Prior Year $223 M + 12% $52 M 22% 3 Total Company 2014 % +(-) Prior Year Sales $1,048 M + 9% Operating Income(1) $124 M (2%) EPS(1) $1.76 + 2% (1) After non-GAAP adjustments – see 10-K for reconciliation to GAAP
Slide 4: Earnings Per Share
Earnings Per Share 4 $0 $0.25 $0.50 $1.00 $1.50 $1.25 $0.75 $2.00 $1.75 2014 $1.76 2013 $1.68 $1.72 2012 $1.73 $1.57 2011 $1.33 $1.35 2010 $0.83 $0.95 Adjusted EPS $1.65 $1.41 EPS Before Restructuring EPS
Slide 5: Return on Invested Capital
Return on Invested Capital(1) 5 (1) Return on invested capital = operating income ÷ (average net debt plus equity) after non-GAAP adjustments (see 10-K for reconciliation to GAAP operating income) 0% 10% 5% 20% 15% Franklin Electric Peer E Peer C Peer B Peer A 11.1% Peer D 12.5% 18.1% 16.4% 14.4% 16
Slide 6: Strong Balance Sheet
Strong Balance Sheet 6 2014 2013 2012 Cash & Marketable Securities $59 M $135 M $103 M Net Debt/Capital 15% 7% 9%
Slide 7: Consecutive Annual Dividend Payment Increases
22 Consecutive Annual Dividend Payment Increases 7 23 $0 1993 $0.10 $0.15 $0.20 $0.25 $0.30 $0.05 1994 1995 1996 1997 1998 1999 2000 2002 2009 2003 2004 2005 2006 2007 2008 2010 2001 2011 2012 2013 $0.35 2014 2015 $0.40
Slide 8: Two Current Issues
8 Two Current Issues
Slide 9: Baker Hughes US Oil Rig Count
Ke A ae 1,720 Baker Hughes US Oil Rig Count Apro7 Pioneer U.S. Oil Rig Counts, ‘Apr-09 Aprt Aprs3
Slide 10: Q1 2015 - Consolidated
Q1 2015 - Consolidated Franklin Electric Co. Inc. 10 Q1 2015 Q1 2014 % +(-) Prior Year Sales $225.7 M $231.4 M (2%) Operating Income(1) $16.7 M $26.2 M (36%) EPS(1) $0.32 $0.35 (9%) (1) After non-GAAP adjustments – see 10-K for reconciliation to GAAP EPS
Slide 11: Restated Q1 2014 - Consolidated
Restated Q1 2014 -Consolidated Franklin Electric Co. Inc. 11 Q1 2015 Q1 2014 % +(-) Prior Year Sales $225.7 M $217.4 M + 4% Operating Income(1) $16.7 M $23.8 M (30%) EPS(1) $0.32 $0.31 + 3% (1) After non-GAAP adjustments – see 10-K for reconciliation to GAAP EPS (at 2015 Exchange Rates)
Slide 12: US Groundwater Weather Agriculture New Distribution
US Groundwater 12 Weather Agriculture New Distribution (16% of Total Water Q1 Sales)
Slide 13: Strategy
Strategy 13
Slide 14: Business Segments
Business Segments 14 Water Systems 79% Fueling Systems 21% *Based on 2014 revenue *
Slide 15: Water Systems Sales
Water Systems Sales 15 Groundwater Pumping Systems 57% Surface Pumps 43% * *Based on 2014 revenue
Slide 16: Water Systems Sales
Water Systems Sales 16 Irrigation & Industrial Groundwater Pumping Systems 24% Residential Groundwater Pumping Systems 33% Residential Surface Pumps 19% Irrigation & Industrial Surface Pumps 24% *Based on 2014 revenue *
Slide 17: Water Systems Sales
Water Systems Sales 17 Irrigation & Industrial Groundwater Pumping Systems 24% Residential Groundwater Pumping Systems 33% Residential Surface Pumps 19% Irrigation & Industrial Surface Pumps 24% #2 Global Supplier to residential water pumping systems distribution channel #1 Global supplier to agricu
Slide 18: Sales in Developing Regions
Sales in Developing Regions 18 2010 $0 $50 $75 $100 $125 $150 $175 $200 $225 2004 2005 2006 2007 2008 2009 $25 2011 $250 $300 $350 2012 $325 $275 2013 $65 M 2014 $400 $375 $401 M $361 M $340 M $306 M $258 M $217 M $232 M $161 M $104 M $85 M
Slide 19: Sales Growth Rates in US $ and Local Currency
MENA (IMPO) US $ Local 13.0% 22.3% Sales Growth Rates in US $ and Local Currency 19 LATIN AMERICA US $ Local 4.1% SOUTHERN AFRICA US $ Local (6.2%) APAC US $ Local 13.0% 2011-2014 CAGR 15.3% 6.9% 20.6%
Slide 20: Brazil
Brazil 20 Brazil has 388 million hectares of fertile land and high productivity, of which 90 million have not been explored yet. (2) Freshwater is one of Brazil’s most plentiful resources, with the country holding about 12 percent of Earth’s supply. (1) Largest global exporter of iron, coffee, soy,
Slide 21: Brazil Distribution
AM AC RR PA MA PI AP RO MT TO CE RN PB PE AL SE BA MG SP PR SC RS MS GO DF ES RJ January 2008 Main offices and factory: Joinville, Santa Catarina Distribution Centers: Ananindeua – Para Recife – Pernambuco Contagem – Minas Gerais Cotia – Sao Paulo Aparecida de Goiânia – Goias June 2014 Offices and f
Slide 22: India
Demand for water increasing. Production of water-intensive crops is expected to grow by 80% between 2000 and 2050. (1) India 22 India is 17.5% of the world’s population and rapidly growing. Groundwater irrigation has been expanding at a very rapid pace in India since the 1970s and now accounts for o
Slide 23: India Distribution
23 India Distribution August 2014 – Acquired Pluga Main Office: Savli, Gujarat, Vadadora 2012 – Subsidiary Established Office: New Dehli
Slide 24: Solar Water Systems
Solar Water Systems 4 — = iy La his P | oe Ky] " .« eal : py YK) ey Ay) ii nt ' \ , * : | ‘ ‘\< g es is
Slide 25: Projected Energy Demand
Projected Energy Demand 25 * Source: EIA – International Energy Outlook (http://commons.wikimedia.org/wiki/File:World_energy_consumption_outlook.png)
Slide 26: Artificial Lift Systems
Artificial Lift Systems 26
Slide 27: New Passenger Vehicle Sales
New Passenger Vehicle Sales 27 * Source: Scotiabank Group Global Auto Report 2000 2014 2000 2014 North America China, India, & South America + 8.1 X 20 M 3 M 19.4 M 24.4 M
Slide 28: Fuel Management Systems
Fuel Management Systems #2 Global Supplier Vapor Recovery Systems #1 Global Supplier Piping & Containment Systems #1 Global Supplier Pumping Systems #1 Global Supplier Fueling Systems 28
Slide 29: Fueling Systems Developing Regions
Fueling Systems Developing Regions 29 United States 49% Developed Non-US 19% Developing Regions 32% *2014 Developed Regions 5 YEAR CAGR 9.0% Developing Regions 5 YEAR CAGR 24.0%
Slide 30: Fueling Systems India JV Stage I Vapor Recovery
Fueling Systems India JV Stage I Vapor Recovery 30
Slide 31: Fueling Systems Stage II Vapor Recovery
Fueling Systems Stage II Vapor Recovery 31
Slide 32: New Products
New Products 32 HVAC/INDUSTRIAL COMMERCIAL BOOSTING SOLAR PUMPING CONSTANT PRESSURE WASTEWATER OVERFILL PREVENTION
Slide 33: Uses of Cash - 2005 to 2014
Uses of Cash - 2005 to 2014 33 Dividends/Stock Repurchase Capital Expenditures & R&D Acquisitions $220 M $381 M $433 M
Slide 34: Acquisition Timeline
Acquisition Timeline 34 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 JBD FUE LI N G FUE LI N G W A TE R
Slide 35: Acquisitions
Acquisitions • Fragmented Global Markets – Bolt-on Acquisition Opportunities • Franklin Acquisition Profile (Past 10 Years) – Acquisitions per Year ≈ 2 – Purchase Price $1-125 M (avg. $25 M) – Average EBITDA Multiple ≈ 7.5 X 35
Slide 36: KeyBanc Investor Conference May 27, 2015
KeyBanc Investor Conference May 27, 2015