2016 Financial Highlights
In 2016, Franklin Electric recovered well from a challenging 2015 with organic growth and increased profits. We generated strong cash flow and our return on invested capital made a significant improvement back towards historical levels.
Nearly forty percent of our sales are in developing regions of the world. Even with continued political, social, and economic uncertainty, our water businesses in Latin America and Turkey delivered record results in 2016 and we continued to expand our presence and reach in Southeast Asia, where we also achieved record results.
Focus on Customer
Our focus continues to be on our principal customer, the professional contractor/installer. Around the globe, these individuals trust their livelihood to Franklin Electric, and we focus on their success by providing quality products, when and where they need them, and by supporting them with training and service on the telephone or on site.
While leading the fueling systems industry with contractor training, our relentless focus on contractor safety and our strategy of providing the lowest total cost of ownership has resulted in major marketers and oil companies specifying our equipment. The resulting sales and earnings growth in 2016 led to another record year for the Fueling Systems business.
Our focus on system solutions is an important component of our strategy across both of our businesses. In our Water Systems business, we introduced a new platform of application specific drives and expanded our motor and pump offering to provide more efficient systems that will save our customers significant amounts in energy costs the world over.
|Operating income as a percent of sales||%||11.7||9.8||9.6|
|Debt net of cash, equivalents and investments||$||85.9||139.2||118.6|
|Net debt as a percent of equity||%||14.0||25.0||19.9|
|Net cash flow from operating activities||$||115.4||99.6||47.3|
|Capital expenditures, net||$||33.1||26.0||33.9|
|Return on average invested capital (1)||%||16.0||13.5||14.5|
|Weighted average common shares outstanding||46.7||47.6||48.2|
|Income per Share:|
|Per weighted average common share, assuming dilution||$||1.65||1.50||1.41|
|Dividends per common share||$||0.3975||0.3825||0.3475|
Earnings per Share
Five Year Financial History
|2016||2015||2014 (c)||2013||2012 (d)|
|Income tax expense||$||24,798||12,625||18,851||28,851||32,250|
|Net income attributable to Franklin Electric Co., Inc.||$||78,745||72,945||69,806||81,958||82,864|
|Depreciation and amortization||$||35,534||35,476||37,210||31,356||28,335|
|Working capital (a)(b)(e)||$||326,058||293,450||268,434||333,880||283,278|
|Property, plant, and equipment, net||$||196,137||190,039||209,786||208,596||171,975|
|Total assets (a)||$||1,039,905||996,111||1,075,797||1,051,770||976,283|
|Long-term debt (a)||$||156,544||187,806||143,605||174,063||150,633|
|Net income attributable to Franklin Electric Co., Inc., to sales||%||8.3||7.9||6.7||8.5||9.3|
|Net income attributable to Franklin Electric Co., Inc., to average total assets||%||7.7||7.0||6.6||8.1||9.2|
|Current ratio (b)(f)||3.1||3.0||2.3||3.4||2.9|
|Number of common shares outstanding||46,376||46,219||47,594||47,715||47,132|
|Market price range|
|Net income attributable to Franklin Electric Co., Inc., per weighted average common share||$||1.67||1.52||1.43||1.70||1.76|
|Net income attributable to Franklin Electric Co., Inc., per weighted average common share, assuming dilution||$||1.65||1.50||1.41||1.68||1.73|
|Book value (g)||$||13.12||11.73||12.38||12.38||10.78|
|Dividends per common share||$||0.3975||0.3825||0.3475||0.3050||0.2850|
- (1) Return on average invested capital = (earnings before interest, taxes divided by average year-end net debt plus equity).
- (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, 2013, and 2012 were restated above to reflect the adoption of the ASU. See Footnote 2 of the Company’s 2016 Form 10-K for additional information regarding this ASU
- (b) Balances as of year-end 2014, 2013, and 2012 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 70.5% owned subsidiary, Pioneer Pump Holdings, Inc., since the Company's acquisition of an additional 39.5% in the first quarter of 2012, 100% of the wholly owned subsidiary, Cerus Industrial Corporation, since its acquisition in the third quarter of 2012, and 100% of the wholly owned subsidiary, Flexing, Incorporated, since the Company's acquisition in the fourth quarter of 2012.
- (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, 2016, 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.