Franklin Electric Co., Inc. · NASDAQ:FELE
Franklin Electric — Shareholder Meeting (April 2009)
31 slides from Franklin Electric's shareholder meeting presentation, Apr 24, 2009
Slide 1: Shareowners' Meeting
Shareowners’ Meeting April 24, 2009 1
Slide 2: Topics
Topics • 2008 Financial Highlights • Growth Strategy Overview • 2009 Outlook 2
Slide 3: 2008 Financial Highlights
2008 Financial Highlights 2008 Sales $745.6 M +24% Earnings per share $1.90 +56% Water sales $557.0 M +19% Water operating earnings $67.6 M +19% Fueling sales $188.6 M +40% Fueling operating earnings $49.4 M +100% Interest coverage ratio1 9.3X +4% Dividends per share $0.50 per year +6% 1) EBITDA ÷ I
Slide 4: Franklin Financial Performance vs. Global Competitors 2008
Franklin Financial Performance vs. Global Competitors 2008 % Sales % Op. Income % OI/Avg Growth Growth Assets Pentair (Water) -1.1% -8.8% 9.4% ITT (Fluid Technologies) 9.4% 9.7% 12.1% Grundfos 13.1% -17.2% 7.8% Ebara (Fluid Machinery) 5.1% 25.6% 1.1% AO Smith (Electrical) -4.0% 4.1% 7.5% Danaher (Pr
Slide 5: Selected by Forbes as one of the 200 Best Run Small Companies
Selected by Forbes Magazine for 6 years as one of the “200 Best Run Small Companies in America” 5
Slide 6: Strategic Focus
Strategic Focus Residential, Agricultural & Commercial Water Systems Petroleum Equipment $5.2 B global market potential $1.0 B global market potential • Brand equity • Leadership position • Growing globally • Fragmented customer base • Fragmented supply base * Current Franklin management estimates 6
Slide 7: Product/Market Sales Mix
Product/Market Sales Mix 2008 Sales - $745.6 M Fueling Systems 25% Water Systems 75% 7
Slide 8: Water Systems
Water Systems Product Line Extensions and Geographic Expansion 1950s 1980s 2005 2006 Today Franklin Submersible Sub Motors, Controls Sub Motors, Controls, Sub Motors, Controls, Drives, Ongoing Product Line Motor and Drives Drives and Cleanwater and Extension and Global Cleanwater Pumps Wastewater Pu
Slide 9: US Residential, Agricultural & Commercial
US Residential, Agricultural & Commercial Pumping Systems Product Line Extensions (2004-2008) Year of Franklin Entry Product Categories Market Size1 Before 2004 2005 2006 2007 2008 Submersible Motors, $240 M X X X X X Drives & Controls 4” Submersible Pumps $220 M X X X X 6-8” Pump Ends $80 M X X X X
Slide 10: Water Systems: International Sales Growth
Water Systems International Sales Growth 10
Slide 11: Franklin Motobombas (Schneider)
Franklin Motobombas (Schneider) • Brazil’s leading producer of residential, agricultural, and commercial pumping systems • 2008 sales of $47 M Distribution Centers HQ, Plant & Foundry Joinville, Brazil 11
Slide 12: Franklin Motobombas (Schneider)
Franklin Motobombas (Schneider) • Brazil’s leading producer of residential, agricultural, and commercial pumping systems • 2008 sales of $47 M Plant Foundry 12
Slide 13: Franklin Motobombas (Schneider)
Franklin Motobombas (Schneider) • Brazil’s leading producer of residential, agricultural, and commercial pumping systems • 2008 sales of $47 M Launching Franklin Submersible Pumps and Motors 13
Slide 14: Vertical S.p.A.
Vertical S.p.A. • Leading producer of fabricated stainless steel water pumps • $25 M sales 14
Slide 15: Vertical S.p.A.
Franklin Electric Vert ical S.p.A 15
Slide 16: Vertical S.p.A.
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Slide 17: Vertical S.p.A.
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Slide 18: Vertical S.p.A.
“(ie Franklin Electric Vertical S.p.A. 18
Slide 19: Vertical S.p.A. Cross Selling Opportunities
Vertical S.p.A. Cross Selling Opportunities 19
Slide 20: Inline Booster Pump Development
Inline Booster Pump Development • Target homeowners with lower than desired incoming pressure • Provides boosted and constant pressure over a wide range of flow demands • Low cost and silent • Franklin drive technology and Vertical pump technology • First year US/Canadian sales potential $3.0 - $4.5
Slide 21: Fueling Systems
Fueling Systems Product Line Extensions and Geographic Expansion 1960s 1980s 1990s 2000s Today Franklin Explosion-Proof FEPetro Pumps FEPetro Pumps Adjacent Products Ongoing Product Line Submersible Motor and Drives Extension and Geographic Expansion Franklin $0.5 M $1 M $21 M $92 M $189 M Fueling (
Slide 22: Fueling Systems: Recent Product Line Extensions
Fueling Systems Recent Product Line Extensions • Vapor control systems – 2006 (Healy acquisition) • Vapor monitoring systems – 2006 (internal development) California Vapor Control Mandate • 11,200 filling stations in California • $26,000/station ($300 M opportunity) • Franklin is one of two authoriz
Slide 23: Sales Growth Outside California
Sales Growth Outside California Vapor Control Initiatives by Environmental Authorities in International Markets 23
Slide 24: European Nozzle Development
European Nozzle Development • Franklin vapor control technology • Introduce in 2010 • Conventional and diesel nozzles 24
Slide 25: Replacement Business
Replacement Business • Nozzles and hanging hardware • Limited product life due to wear and tear • $10-$20 M sales by 2010 and growing as installed base increases and ages 25
Slide 26: Colibri Inventory Management System
Colibri Inventory Management System • Low cost inventory management hardware and software • Features for developing regions: 1. Remote inventory monitoring/control 2. Reconciliation (pay only for gallons delivered) 3. Product adulteration monitoring (patented) 26
Slide 27: 1st Quarter 2009 Results and Outlook
1st Quarter 2009 Results and Outlook Quarter Sales % ± Prior EPS $/Share % ± Prior Q1 2008 $176 M +35% $0.35 +67% Q2 2008 $202 M +32% $0.67 +136% Q3 2008 $216 M +31% $0.75 +48% Q4 2008 $152 M -1% $0.15 -35% Q1 2009 $150 M -15% $0.17 -51% 27
Slide 28: Recession Impact on Industry Shipments
Recession Impact on Industry Shipments North American 4” Groundwater Pumping Systems Unit Shipments1 First 9 Months 2008 -4.2% Q4 2008 -17% Q1 2009 -31% Causes of Decline: • Q1 single family housing starts down about 45% versus prior year • Customer inventory reduction 1) Sources: Water Systems Coun
Slide 29: Impact of Stronger Dollar on Reported Sales
Impact of Stronger Dollar on Reported Sales Q1 2009 Decline Due to Foreign Q1 2009 Q1 2008 ± Q1 2008 Exchange Translation Sales $150 M $176 M -$26 M -13 M 29
Slide 30: Response to Global Recession
Response to Global Recession • Focus on excellent quality and service for customers – BEST OVERALL VALUE • Reduce costs Initiative Cost Reduction vs. 2008 (full year) Raw material costs $5 M to $7 M Vendor negotiations Reduce labor costs $3 M to $5 M Linares expansion Spending, headcount, Fixed spen
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