Franklin Electric Co., Inc. · NASDAQ:FELE
Franklin Electric — Baird Industrial Conference 2012
36 slides from Franklin Electric's conference presentation, Nov 7, 2012
Slide 1: Baird Industrial Conference November 2012
Baird Industrial Conference November 2012
Slide 2: Safe Harbor Statement
2 “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 c
Slide 3: Topics
Topics • Company Overview • Water Systems Growth Initiatives • Fueling Systems Growth Initiatives 3
Slide 4: 2012 Financial Summary
2012 Financial Summary 4 9 Months YTD 2012 % +(-) Prior Net Sales $687 M + 8.3% Earnings Per Share1 $2.58 + 17.3% ROIC2 20% + 100 BPS 1 After non-GAAP adjustments – See 10-Q for reconciliation 2 ROIC = Operating income after non-GAAP adjustments ÷ (net debt + equity)
Slide 5: Business Segments
1 After non-GAAP adjustments – See 10-Q for reconciliation Business Segments 5 % of Franklin Sales Water Systems 80% Fueling Systems 20% Fueling Systems 9 Months YTD 2012 % +(-) Prior Sales $129 M + 4% Operating Income1 $26 M + 13.5% Water Systems 9 Months YTD 2012 % +(-) Prior Sales $558 M + 9.3% O
Slide 6: Water Systems Sales: Product Categories
Water Systems Sales 6 Groundwater Pumping Systems Misc. Irrigation & Industrial Pumps 14% Product Categories – % of Water Systems Sales1 1 Franklin Management Estimates 53% 13% 9% Drives & Controls Mobile Pumping Systems 11% Residential Wastewater Pumps
Slide 7: Water Systems Sales: Geographical Regions
Water Systems Sales 7 45% Geographical Regions – % of Water Systems Sales 19% 36% Developing Regions United States Developed Non-US
Slide 8: Water Systems Sales: End Markets
Water Systems Sales 8 46% End Markets – % of Water Systems Sales 6% 28% 9% 11% Non Discretionary Replacement Purchases Represent +80% of Sales Industrial Irrigation & Agricultural Mining/Oil & Gas Residential & Light Commercial Municipal
Slide 9: Water Systems – Groundwater Pumping Systems
Water Systems – Groundwater Pumping Systems 9 Groundwater Pumping Equipment Global Market = $2 B Franklin Share ≈ 20% (#1 Global Supplier)
Slide 10: Groundwater Pumping Systems – Global Aquifer Map
Groundwater Pumping Systems – Global Aquifer Map 10 The World’s aquifers contain 50 times as much fresh water as all the World’s lakes, ponds, rivers, and streams combined.
Slide 11: Water Systems – Residential Wastewater Pumps
Water Systems – Residential Wastewater Pumps 11 • US/Canada Addressable Market ≈ $ 450 M (excluding Big Box Retail) • Franklin Market Rank = #2 • Product Line Redesign – Improved Efficiency and Reduced Cost • New Home Construction Outlook is Improving
Slide 12: Water Systems – Mobile Pumping Systems
Water Systems – Mobile Pumping Systems 12
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Slide 17: Water Systems – Mobile Pumping Systems
Water Systems – Mobile Pumping Systems 17 • $1 B Global Addressable Market • #4 Global Supplier • Pioneer Pump Sales Growth rate 27%/year (2006-2011) • Superior Efficiency, Durability and Ease of Maintenance
Slide 18: Water Systems – Drives and Controls
Water Systems – Drives and Controls 18 Constant Pressure Systems Residential & Commercial Agricultural Irrigation Systems Controls Electrical Energy Conservation • Leading supplier of drives and controls for low horsepower groundwater pumping applications • Cerus acquisition – technology leader in h
Slide 19: Water Systems Growth Strategy
Water Systems Growth Strategy • Product Line Extensions • Geographic Expansion • Bolt-on Acquisitions 19
Slide 20: Product Line Extension – Oil and Gas Deliquification
Product Line Extension – Oil and Gas Deliquification 20 Gas Line Water Line Typical Oil/Gas Well Depth (2000 to 6000 feet) Typical Water Well Depth (40 to 600 feet)
Slide 21: Product Line Extension – Oil and Gas Deliquification
Product Line Extension – Oil and Gas Deliquification 21 Gas Line Water Line Typical Oil/Gas Well Depth (2000 to 6000 feet) Typical Water Well Depth (40 to 600 feet) • Lower Cost • Superior Durability • Superior System Controls Franklin System Advantages
Slide 22: Product Line Extension – Oil and Gas Deliquification
Product Line Extension – Oil and Gas Deliquification 22 Gas Line Water Line Typical Oil/Gas Well Depth (2000 to 6000 feet) Typical Water Well Depth (40 to 600 feet) • Market Focus – US/Canada, Australia & South Africa – Coal Bed Methane Wells, Wet Shale Wells & Oil Stripper Wells – Horizontal & Vert
Slide 23: Product Line Extension – Oil and Gas Deliquification
Product Line Extension – Oil and Gas Deliquification 23 Gas Line Water Line Typical Oil/Gas Well Depth (2000 to 6000 feet) Typical Water Well Depth (40 to 600 feet) • Beta Test • 20 Systems in Operation • Commercialization in December 2012 • 2013 – Trial Installations Product Status:
Slide 24: Solar Driven Water Systems
Solar Driven Water Systems 24
Slide 25: Product Line Extensions – Drives and Controls
Product Line Extensions – Drives and Controls 25 Residential & Commercial Building Water Pressure Control Systems Center Pivot Irrigation System
Slide 26: Water Systems – Sales in Developing Regions
Water Systems – Sales in Developing Regions 26 2010 $0 $50 $75 $100 $125 $150 $175 $200 $225 2004 2005 2006 2007 2008 2009 $55 M $77 M $94 M $135 M $204 M $188 M $228 M % of Total Franklin Water Sales 16% 36% $25 2011 $270 M $250 $275 $300 $286 M $55 M Base $106 M Acquisitions $126 M Organic 2012 FC
Slide 27: Water Systems – Three-Year Growth and Margin
Water Systems (for the 3 year period ending LTM 9/30/2012) 27 3 year Sales Growth Rate 12% per year 3 year Operating Income Growth Rate 26% per year1 3 year Operating Income Margin Improvement 12%1 to 17%1 1 After non-GAAP adjustments – See 10-Q for reconciliation
Slide 28: Fueling Systems
Fueling Systems 28 Fuel Management Systems #2 Global Supplier Vapor Recovery System #1 Global Supplier Pumping System #1 Global Supplier Piping & Containment Systems #1 Global Supplier • Global Addressable Market ≈ $1 B
Slide 29: Fueling Systems – Global Growth Up 5.5x
Fueling Systems – Global Growth 29 Up 5.5x North America 2000 2011 20 M 15.2 M 3 M 16.5 M China, India & Latin America New Passenger Vehicle Sales 1 Source: Scotiabank Group Global Auto Report
Slide 30: Fueling Systems – Global Conversion to Franklin Technologies
United States Rest of World Number of Stations 175,000 500,000 Stations with pressure pumping technology 97% 23% Stations with vapor recovery systems 80% 17% Stations with fuel management systems 75% 36% Fueling Systems – Global Growth 30 Global Conversion to Franklin Technologies (on board) * Frank
Slide 31: Fueling Systems – Global Growth
Fueling Systems – Global Growth 31 • Inventory management • Leak detection • Inventory measurement • Fraud prevention • Low-cost Adapting US Technologies to Needs of International Markets
Slide 32: Fueling Systems – Global Growth
Fueling Systems – Global Growth 32 Piping & Containment APT (UL Approved) UPP (EN Approved) Dispensing Systems Healy/Franklin System Omni Series Adapting US Technologies to Needs of International Markets
Slide 33: Fueling Systems – Segment Sales
Fueling Systems – Segment Sales 33 2011 2004 $71 M $167 M $17 M $71 M % International 24% 42% International Sales
Slide 34: Fueling Systems – Three-Year Growth and Margin
Fueling Systems (for the 3 year per ending LTM 9/30/2012) 34 3 year Sales Growth Rate 7% per year 3 year Operating Income Growth Rate 10% per year1 3 year Operating Income Margin Improvement 19%1 to 20%1 1 After non-GAAP adjustments – See 10-Q for reconciliation
Slide 35: Acquisitions
Acquisitions • Fragmented Global Markets – Bolt-on Acquisition Opportunities • Franklin Acquisition Profile (Past 7 Years) – Acquisitions per Year – 2 – Average Purchase Price – $50 M – Average Ebitda Multiple – 7.5 X 35
Slide 36: Baird Industrial Conference November 2012
Baird Industrial Conference November 2012