Franklin Electric Co., Inc. · NASDAQ:FELE
Franklin Electric — KeyBanc Investor Conference 2014
34 slides from Franklin Electric's conference presentation, May 28, 2014
Slide 1: KeyBanc Investor Conference May 28, 2014
KeyBanc Investor Conference May 28, 2014
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: 2009-2013 Sales History
2009-2013 Sales History 2010 $0 $200 $300 $400 $500 $600 $700 2009 $626 M $100 2011 $1,000 $891 M 2012 $714 M $821 M $900 $800 3 $965 M 2013
Slide 4: 2009-2013 Operating Income History
2009-2013 Operating Income(1) History 1 After non-GAAP adjustments – See 10Q For reconciliation 2010 $0 $50 $75 $100 2009 $49.9 M $25 2011 $125 $114.9 M 2012 $72.4 M $95.7 M 4 $127.4 M 2013
Slide 5: 2014 Q1 Sales & Earnings Growth
2014 Q1 Sales & Earnings Growth 2014 Q1 % +(-) Prior Year Sales $231 M + 4% EPS(1) $0.35 + 6% ROIC(2) 19.2% -0.4% (1) After non-GAAP adjustments – see 10-K for reconciliation to GAAP EPS (2) ROIC LTM operating income after non-GAAP adjustments ÷ (net debt + equity) 5
Slide 6: Consecutive Quarters of Adjusted EPS Growth
17 Consecutive Quarters of Adjusted EPS(1) Growth 18 0 Q4 2009 $0.50 $0.75 $1.00 $1.25 $1.75 $0.20 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q3 2013 Q4 2013 Q4 2011 Q2 2013 (1) After non-GAAP adjustments – see 10-K for reconciliation to GAAP EPS
Slide 7: Strong Balance Sheet
Strong Balance Sheet 7 At Year-end 2010 2011 2012 2013 Net Debt/Capital 2.1% 1.7% 9.2% 7.0% Cash & Marketable Securities $140M $153M $103M $135M Gross Debt/EBITDA 1.7 1.3 1.1 1.2
Slide 8: Consecutive Annual Dividend Payment Increases
21 Consecutive Annual Dividend Payment Increases 22 $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 8
Slide 9: 2013 Net Sales Business Segments
Water Systems 79% Fueling Systems 21% 9 2013 Net Sales Business Segments
Slide 10: Global Aquifer Map
The World’s aquifers contain 50 times as much fresh water as all the World’s lakes, ponds, rivers, and streams combined. 10 Global Aquifer Map
Slide 11: 2013 Water Systems Sales
United States 46% Developed Non-US 16% Developing Regions 38% 2009-13 Developed World CAGR 13.4% 2009-13 Developing World CAGR 23.9% 11 2013 Water Systems Sales
Slide 12: Global Expansion – Distribution
12 Global Expansion – Distribution
Slide 13: Global Expansion – Platform Acquisitions
$23.6 $33.3 $20.0 Year Prior to Acquisition (at 2013 FX) $41.2 $72.6 $37.2 2013 13 Global Expansion – Platform Acquisitions
Slide 14: 2013 Water Systems Sales
Groundwater Pumping Systems 61% Surface Pumps 39% 14 2013 Water Systems Sales
Slide 15: 2013 Water Systems Sales
Irrigation & Industrial Groundwater Pumping Systems 26% Residential Groundwater Pumping Systems 35% Residential Surface Pumps 19% Irrigation & Industrial Surface Pumps 20% 15 2013 Water Systems Sales
Slide 16: 2013 Water Systems Sales
Irrigation & Industrial Groundwater Pumping Systems 26% Residential Groundwater Pumping Systems 35% Residential Surface Pumps 19% Irrigation & Industrial Surface Pumps 20% #2 Global Supplier to residential water pu ping systems distribution channel #1 Global supplier to agricultural irrigatio pumpin
Slide 17: Product Development Process
CONCEPT MODELING SIMULATION 200 250 300 350 0 500 1000 H ea d (Ft ) Flow (GPM RESULTS TESTING PROTOTYPE OPTIMIZE GEOMETRY 17 Product Development Process
Slide 18: 2013 Water Systems Sales
Irrigation & Industrial Groundwater Pumping Systems 26% Residential Groundwater Pumping Systems 35% Residential Surface Pumps 19% Irrigation & Industrial Surface Pumps 20% 18 2013 Water Systems Sales
Slide 19: Water Systems – Drives & Controls
• Leading supplier of drives and controls for low horsepower groundwater pumping applications • Cerus acquisition (FCS) – technology leader in higher horsepower fluid transfer applications • Sell FCS drives and controls with Franklin high horsepower pumps and motors • Doubles revenue per installatio
Slide 20: Water Systems – High Efficiency
Present Motor Eff. New 6” Motor – Unique High Efficiency Design 20 Water Systems – High Efficiency
Slide 21: Water Systems – Solar
21 Water Systems – Solar
Slide 22: Oil and Gas Deliquification
Oil and Gas Deliquification 22
Slide 23: Drives – HVAC Market
Drives – HVAC Market 23
Slide 24: Pioneer Pump Rental in UK
Pioneer Pump Rental in UK • Opened first branch – Q2, 2013 • Acquired small competitor – Q3, 2013 • Breakeven – Q1, 2014 24
Slide 25: Fueling 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 25
Slide 26: 2013 Fueling Systems Sales
2013 Fueling Systems Sales United States 52% Developed Non-US 17% Developing Regions 31% 2009-13 Developed World CAGR 8.6% 2009-13 Developing World CAGR 26.4% 26
Slide 27: Fueling Systems – Inorganic Growth
Fueling Systems – Inorganic Growth 2010 Acquisitions 60% Organic 40% GROWTH 2002 2000 2004 2006 2012 27
Slide 28: Fueling Systems – Global Growth
Fueling Systems – Global Growth North America 2000 2013 20 M 15.2 M 3 M 17.4 M China, India & Latin America 1 Source: Scotiabank Group Global Auto Report New Passenger Vehicle Sales(1) Up 5.8X 28
Slide 29: Fueling Systems – Global Growth
Fueling Systems – Global Growth(1) United States Rest of World Number of Stations 175,000 550,000 Stations with pressure pumping technology 97% 23% Stations with vapor recovery systems(2) 95% 17% Stations with fuel management systems 75% 35% Stations with flexible piping 45% 35% 1 Franklin managemen
Slide 30: Fueling Systems – New Products
Fueling Systems – New Products 30
Slide 31: Fueling Systems – New Product Development
Fueling Systems – New Product Development • Inventory management • Leak detection • Inventory measurement • Fraud prevention • Low-cost Addressing the Needs of both Developed and Developing Markets 31
Slide 32: Fueling Systems – New Product Development
Fueling Systems – New Product Development Addressing the Needs of both Developed and Developing Markets 32
Slide 33: Acquisitions
Acquisitions • Fragmented Global Markets – Bolt-on Acquisition Opportunities • Franklin Acquisition Profile (Past 10 Years) – Acquisitions per Year – 1-2 – Purchase Price – $1-125 M (Ave. $50 M) – Average EBITDA Multiple – 7.5 X 33
Slide 34: Franklin Electric
@ Franklin Electric