Year of Strategic Significance
This year was one of strategic significance for our Company. We forward integrated into distribution in the U.S. Groundwater channel, and following our strategy of leveraging our global platform and competency in system design, we introduced many new products that improve customer experience, reduce total cost of ownership and protect the environment.
Formation of Headwater Companies
We formed Headwater Companies, by acquiring three strong, customer-focused distributors competing in the U.S. groundwater channel. Headwater will support the continued growth and success of the entire U.S. groundwater industry with a mission to serve and support the contractor, by suppling pumping equipment from an array of suppliers.
Water Systems Success
In our Water Systems business, the recovery of the oil and gas market, growing brand recognition in other channels, and new products, all drove tremendous growth in our Pioneer brand de-watering pump business. Our Water Systems business also had positive traction in the more developed markets of Europe and the U.S with several new products.
Fueling Systems Success
Fueling Systems achieved record annual sales and earnings, with a 14% increase in sales outside the U.S. and Canada. The business also remained at the forefront of innovation, introducing several new state-of-the-art products, including the Cable Tight™ wire management system and new EVO™ tank gauges, and continued to build on our FFS PRO™ installer-focused online tools.
Our Customers are Our Partners
Franklin employees understand our customers' need for superior products that are more efficient, dependable, connected, and cost effective. Our employees are dedicated and driven forward-thinkers who work diligently and collaboratively in cross-functional teams to ensure Franklin remains competitive and that our products and system solutions meet our customers’ needs.
|Operating income as a percent of sales||%||9.5||11.7||9.8|
|Debt net of cash, equivalents and investments||$||158.8||85.9||139.2|
|Net debt as a percent of equity||%||22.7||14.0||25.0|
|Net cash flow from operating activities||$||66.8||115.4||99.6|
|Capital expenditures, net||$||33.3||33.1||26.0|
|Return on average invested capital (1)||%||14.7||16.0||13.5|
|Weighted average common shares outstanding||47.0||46.7||47.6|
|Income Per Share:|
|Per weighted average common share, assuming dilution||$||1.65||1.65||1.50|
|Dividends per common share||$||0.4225||0.3975||0.3825|
- (1) Return on average invested capital = (earnings before interest, taxes divided by average year-end net debt plus equity)
Earnings per Share
Five Year Financial History
|2017 (d)||2016||2015||2014 (c)||2013|
|Income tax expense||$||25,994||24,798||12,625||18,851||28,851|
|Net income attributable to Franklin Electric Co., Inc.||$||78,180||78,745||72,945||69,806||81,958|
|Depreciation and amortization||$||38,506||35,534||35,476||37,210||31,356|
|Working capital (a)(b)(e)||$||343,230||326,058||293,450||268,434||333,880|
|Property, plant, and equipment, net||$||215,694||196,137||190,039||209,786||208,596|
|Total assets (a)||$||1,185,353||1,039,905||996,111||1,075,797||1,051,770|
|Long-term debt (a)||$||125,596||156,544||187,806||143,605||174,063|
|Net income attributable to Franklin Electric Co., Inc., to sales||%||7.0||8.3||7.9||6.7||8.5|
|Net income attributable to Franklin Electric Co., Inc., to average total assets||%||7.0||7.7||7.0||6.6||8.1|
|Current ratio (b)(f)||2.4||3.1||3.0||2.3||3.4|
|Number of common shares outstanding||46,630||46,376||46,219||47,594||47,715|
|Market price range|
|Net income attributable to Franklin Electric Co., Inc., per weighted average common share||$||1.67||1.67||1.52||1.43||1.70|
|Net income attributable to Franklin Electric Co., Inc., per weighted average common share, assuming dilution||$||1.65||1.65||1.50||1.41||1.68|
|Book value (g)||$||14.89||13.12||11.73||12.38||12.38|
|Dividends per common share||$||0.4225||0.3975||0.3825||0.3475||0.3050|
- (a) In 2016, the Company adopted Financial Accounting Standard Board ("FASB") Accounting Standard Update ("ASU") 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This ASU required retrospective adoption; therefore, years 2015, 2014, and 2013 were restated above to reflect the adoption of the ASU.
- (b) Balances as of year-end 2014, and 2013 were not retrospectively adjusted for the adoption of ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which related to the presentation of deferred taxes.
- (c) Includes the results of operations of the Company's 100% wholly owned subsidiary, Bombas Leao S.A., since its acquisition in the second quarter of 2014, and 90% of the Company's owned subsidiary, Impo Motor Pompa Sanayi ve Ticaret A.S., since the Company's acquisition of an additional 10% in the second quarter of 2014.
- (d) Includes the results of operations of the Company's 100% wholly owned subsidiaries since its acquisition of three groundwater distribution companies (2M Company, Inc. ("2M"), Drillers Service, Inc. ("DSI"), and Western Hydro, LLC ("Western Hydro")) in the second quarter of 2017, and 100% of the Company's owned subsidiary, Impo Motor Pompa Sanayi ve Ticaret A.S., since the Company's acquisition of an additional 10% in the second quarter of 2017.
- (e) Working capital = Current assets minus current liabilities.
- (f) Current ratio = Current assets divided by current liabilities.
- (g) Book value = Shareholders' equity divided by weighted average common shares, assuming full dilution.
- “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 currency translation rates, liquidity expectations, business goals and sales growth, involve risks and uncertainties, including but not limited to, risks and uncertainties with respect to general economic and currency conditions, various conditions specific to the Company’s business and industry, weather conditions, new housing starts, market demand, competitive factors, changes in distribution channels, supply constraints, effect of price increases, raw material costs, technology factors, integration of acquisitions, litigation, government and regulatory actions, the Company’s accounting policies, future trends, and other risks which are detailed in the Company’s Securities and Exchange Commission filings, included in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2017, Exhibit 99.1 attached thereto and in Item 1A of Part II of the Company’s Quarterly Reports on Form 10-Q. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and the Company assumes no obligation to update any forward-looking statements.