Franklin Electric Co., Inc. · NASDAQ:FELE
Franklin Electric — Shareholder Meeting (May 2011)
30 slides from Franklin Electric's shareholder meeting presentation, May 6, 2011
Slide 1: Annual Shareowners Meeting
Annual Shareowners Meeting May 6, 2011
Slide 2: Financial Performance Summary - 2010
FRANKLIN ELECTRIC Financial Performance Summary - 2010 % +(-) 2010 Prior Year Sales $713.8 M + 14% (+ 12% organic) Operating Income1 $73.7 M + 36% EPS1 $1.94 + 50% LTM Return on 16.6% + 510 BPS Invested Capital2 Net Debt $12.4 M - 81% Dividend Payments/Share $0.515 + 3% 1 Before restructuring charge
Slide 3: Financial Performance Summary - 1st Quarter 2011
FRANKLIN ELECTRIC Financial Performance Summary 1st Qtr % +(-) 2011 Prior Year Sales $185 M + 16% Operating Income1 $17 M + 25% EPS1 $0.46 + 35% 1 After non-GAAP adjustments including restructuring and legal settlement charges, and gains on foreign currency forward purchase contract and sale of land
Slide 4: Dividend History
FRANKLIN ELECTRIC WATER SYSTEMS Financial Performance Summary Dividend History $0.60 $0.50 $0.40 $0.40 $0.20 $0.10 $0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 4
Slide 5: Strategic Objective
FRANKLIN ELECTRIC Strategic Objective To be the world’s leading supplier to two global distribution channels: Addressable 2010 Sales: Market: • Groundwater and adjacent $5.2 B $583 M pumping systems • Fueling systems $1.0 B $131 M 5
Slide 6: Major Product Categories
FRANKLIN ELECTRIC Global Market Leadership Major Product Categories Franklin Market Share Rank Water Systems Groundwater Pumping #1 (Global) Residential Wastewater Pumping #2 (North & South America) Fueling Systems Fuel Transfer Systems #1 (Pumping & Containment) (Global) Fuel & Vapor Management Sys
Slide 7: Product Line Extensions and Geographic Expansion
FRANKLIN ELECTRIC WATER SYSTEMS Water Systems Growth Product Line Extensions and Geographic Expansion Franklin Submersible Motors, Controls Motors, Pumps, Drives Adjacent Pumping Motor and Drives and Controls Systems 1950s 1990s 2004 2006 Developing Regions Pump share growth in US/Canada Packaged sy
Slide 8: Global Water Supply
FRANKLIN ELECTRIC WATER SYSTEMS Growth in Developing Regions Global Water Supply 0.3% Lakes and river storage Freshwater 2.5% 30.8% Groundwater, including (35,000,000 km3) soil moisture, swamp water and permafrost 68.9% Glaciers and permanent snow cover Saltwater 97.5% (1,365,000,000 km3) Source: Ig
Slide 9: Water Withdrawals by Region
FRANKLIN ELECTRIC WATER SYSTEMS Growth in Developing Regions Water Withdrawals by Region1 km3/year US/Canada 700 Western Europe 400 Latin America 350 Eastern Europe2 200 74% in Developing Mideast/Africa 400 Regions Asia Pacific 2,100 Total 4,150 1 Source UNESCO and management estimates 2 Russia, Ukr
Slide 10: Water Withdrawals by Region
FRANKLIN ELECTRIC WATER SYSTEMS Growth in Developing Regions Water Withdrawals by Region1 % Withdrawals for km3/year Growth Trend Agriculture Use US/Canada 700 Flat 40% Western Europe 400 Flat 20% Latin America 350 Growing 90% Eastern Europe2 200 Growing 70% Mideast/Africa 400 Growing 80% Asia Pacif
Slide 11: Sales in Developing Regions
FRANKLIN ELECTRIC WATER SYSTEMS 10% Share of Sales in Developing Regions1 Addressable Market $228M $225 Total $204M Growth $200 $188M $180M $175 Acquisition $150 $135M Growth $64M $125 $100 $94M $77M Organic $75 Growth $55M $116M $50 $48M $25 $0 2003 2004 2005 2006 2007 2008 2009 2010 % of Total Fra
Slide 12: IMPO Acquisition
FRANKLIN ELECTRIC WATER SYSTEMS Sales in Developing Regions IMPO Acquisition • $28 M Sales • Leader in Groundwater Pumps and Motors in Turkey • Distribution in Turkey and Throughout Mid-East • World Class Manufacturing Capability • Low Cost Manufacturing Base on Door Step of Europe 12
Slide 13: IMPO Acquisition
FRANKLIN ELECTRIC WATER SYSTEMS Sales in Developing Regions IMPO Acquisition • $28 M Sales • Leader in Groundwater Pumps and Motors in Turkey • Distribution in Turkey and Throughout Mid-East • World Class Manufacturing Capability • Low Cost Manufacturing Base on Door Step of Europe 13
Slide 14: Manufacturing in Low Cost Regions
FRANKLIN ELECTRIC WATER SYSTEMS Manufacturing in Low Cost Regions % of Total Water Systems Manufacturing Man-hours 100% 90% 80% 70% 65% 60% 60% 52% 50% 42% 40% 35% 31% 30% 20% 20% 13% 10% 0% 2003 2004 2005 2006 2007 2008 2009 2010 14
Slide 15: New Manufacturing Facilities in Low Cost Regions
FRANKLIN ELECTRIC WATER SYSTEMS New Manufacturing Facilities in Low Cost Regions Linares, Mexico Brno, Czech Republic Suzhou, China 300,000 sq. ft. 80,000 sq. ft. 60,000 sq. ft. Joinville, Brazil 110,000 sq. ft. 15
Slide 16: Manufacturing in Low Cost Regions: Linares, Mexico
FRANKLIN ELECTRIC WATER SYSTEMS Manufacturing in Low Cost Regions Linares, Mexico Manufacturing Complex “Best Manufacturing Plant in Mexico” - Business Directive Initiatives Platinum Quality Award “Best Manufacturing Plant in Mexico” - Best Places to Work Institute “Finalist” - Industry Week Magazin
Slide 17: Pump Share Growth in US/Canada
FRANKLIN ELECTRIC WATER SYSTEMS Pump Share Growth in US/Canada Objective: Expand share of $1.2 B addressable market in the US/Canada Strategy: Use strong motor customer relationships to expand pump sales Focus on the needs of the installing contractor: - Product reliability - Training and technical
Slide 18: Pump Share Growth in US/Canada
FRANKLIN ELECTRIC WATER SYSTEMS Pump Share Growth in US/Canada % Franklin Share - Residential Groundwater Pumps1 (4” Submersibles + Jets) (Year of market entry to most recent quarter) 28-30% 30% 25% Organic 20% Share Growth 15% 10% 5-6% 5% 0% 2005 Q4 2010 1 Management estimates based on Trade Associ
Slide 19: Pump Share Growth in US/Canada
FRANKLIN ELECTRIC WATER SYSTEMS Pump Share Growth in US/Canada % Franklin Share - Residential Wastewater Pumps1 (Sump, Sewage, Effluent, Utility < 2 hp) (Year of market entry to most recent quarter) 30% 25% 20% 18-19% Organic 13-14% Share 15% Growth 10% 5% 0% 2006 Q4 2010 1 Management estimates base
Slide 20: Extend Product Lines to Include More Packaged Systems
FRANKLIN ELECTRIC WATER SYSTEMS Extend Product Lines to Include More Packaged Systems Franklin Motor + Brand “X” Pump Installation + Brand “Y” Drive & Control 20
Slide 21: Extend Product Lines to Include More Packaged Systems
FRANKLIN ELECTRIC WATER SYSTEMS Extend Product Lines to Include More Packaged Systems Franklin Prepackaged Motor, Pump, Installation Drive & Control Contractor benefit: Franklin benefit: - Simplified installation - More revenue per - Performance guarantee installation Motor only Motor & pump Motor,
Slide 22: Coal Seam Natural Gas
FRANKLIN ELECTRIC WATER SYSTEMS Extend Product Lines to Include More Packaged Systems Coal Seam Natural Gas: Metal pipe with cement on outside isolates Perforations are made through the uphole formations from coal seam. casing and cement, into the coal, so gas and water can flow into the well. Metha
Slide 23: Coal Seam Natural Gas – Current Systems
FRANKLIN ELECTRIC WATER SYSTEMS Extend Product Lines to Include More Packaged Systems Coal Seam Natural Gas – Current Systems: Nodding Donkey Oil Field Pump System ($100,000 to $150,000 per well) ($50,000 to $70,000 per well) 23
Slide 24: Coal Seam Natural Gas – Franklin System
FRANKLIN ELECTRIC WATER SYSTEMS Extend Product Lines to Include More Packaged Systems Coal Seam Natural Gas – Franklin System: (up to 1000 meters depth) Pump Motor Significantly Lower Drive Telemetry Cost than Oil Field Discharge head Pumping Systems Ancillary equipment 24
Slide 25: Solar Groundwater Pumping Systems
FRANKLIN ELECTRIC WATER SYSTEMS Extend Product Lines to Include More Packaged Systems Solar Groundwater Pumping Systems: • Franklin system: Pump Motor Annual Market Potential: ≈ $20-30 M per year Inverter/Drive • Franklin value proposition: • Deliver maximum water per unit of sunlight (efficiency) •
Slide 26: Fueling Systems: Product Line Extensions and Geographic Expansion
FRANKLIN FUELING SYSTEMS Product Line Extensions and Geographic Expansion Franklin Submersible FE Petro FE Petro Turbine Adjacent Products Motor Turbine Pump and Drive 2000s 1960s 1980s 1990s International Expansion: Growing motor vehicle population Installation of new technologies 26
Slide 27: Annual Sales of Cars & Light Trucks
FRANKLIN FUELING SYSTEMS Annual Sales of Cars & Light Trucks FCST 2000 2010 North America 20 M 13 M China, India & 3M 15 M Up 500% Latin America 27
Slide 28: Installation of New Technologies in International Markets
FRANKLIN FUELING SYSTEMS Installation of New Technologies in International Markets US Rest of World (175,000 stations) (500,000 stations) Stations with pressure 97% 23% pumping technology Stations with vapor 60-80% 17% recovery systems (on board) Stations with fuel 75% 36% management systems 28
Slide 29: International Sales Growth
FRANKLIN FUELING SYSTEMS International Sales Growth $100 $80 $70 M $60 $40 $35 M $17 M $20 $0 2005 2010 Proforma for Petrotechnik acquisition % of Franklin Fueling Sales: 22% 45% 29
Slide 30: Annual Shareowners Meeting
Annual Shareowners Meeting May 6, 2011