Franklin Electric Co., Inc. · NASDAQ:FELE
Franklin Electric — KeyBanc Industrial Conference 2011
27 slides from Franklin Electric's conference presentation, Jun 1, 2011
Slide 1: KeyBanc Industrial Conference
KeyBanc Industrial Conference June 1, 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% 1 After non-GAAP adjustments including restructuring and legal se
Slide 3: Financial Performance Summary
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: Financial Performance Summary: Outlook for 2nd Quarter
FRANKLIN ELECTRIC Financial Performance Summary Outlook for 2nd Quarter % +(-) Prior Year Consolidated Operating Income + 8 to 12% (After non-GAAP adjustments)1 Effective Tax Rate - 500 BPS (16% lower than prior year) 1 After non-GAAP adjustments including restructuring and legal settlement charges,
Slide 5: Strategic Objective
FRANKLIN ELECTRIC Strategic Objective To be the world’s leading supplier to two global distribution channels: Global LTM 1st Qtr. Addressable 2011 Sales: Market: • Groundwater and adjacent $5.2 B $596 M pumping systems • Fueling systems $1.0 B $143 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: 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 9: 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 10: 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 11: Sales Growth by Region (Q1 2011)
FRANKLIN ELECTRIC Water Systems Sales Growth by Region (Q1 2011) % of Franklin Global Water Sales Asia/ Pacific MidEast/ +19% Africa +6% US/Canada +7% Latin America +19% Europe +3% 11
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: 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 15: Linares, Mexico Manufacturing Complex
FRANKLIN ELECTRIC WATER SYSTEMS Linares, Mexico Manufacturing Complex 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 Mag
Slide 16: 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 17: 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 18: 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 18
Slide 19: 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 20: 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 21: 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 21
Slide 22: 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: ≈ $30-40 M per year Inverter/Drive • Franklin value proposition: • Reliability & durability in the field • Efficiency (water
Slide 23: Fueling Systems: Product Line Extensions and Geographic Expansion
FRANKLIN FUELING SYSTEMS Fueling Systems Growth 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 technol
Slide 24: Annual Sales of Cars & Light Trucks
FRANKLIN FUELING SYSTEMS Annual Sales of Cars & Light Trucks 2000 2010 North America 20 M 13.9 M China, India & 3M 15.6 M Up 5x Latin America Source: Scotiabank Group Global Auto Report 24
Slide 25: 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 25
Slide 26: 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% 26
Slide 27: KeyBanc Industrial Conference
KeyBanc Industrial Conference June 1, 2011
Franklin Electric — KeyBanc Industrial Conference 2011 on 6ix