2021 Chairperson's Letter
I am proud of the many achievements that made 2021 an exceptional year for Franklin Electric, driven by the strength, commitment, and execution of our global team. We captured robust demand while building on our strong foundation through strategic acquisitions that expand our core offerings, enhance our end market positions, and extend our geographic reach. Our team was able to accomplish these objectives and deliver exceptional results against a difficult macroeconomic backdrop, navigating ongoing business challenges in the supply chain, rising input costs, and inflationary pressures. Our unwavering focus on our Key Factors for Success: quality, availability, service, innovation, and cost has guided us through these challenges, and we emerged from the year in an even stronger position.
From a financial perspective, 2021 was the highest performing year in our history, capped off by record sales and earnings in our fourth quarter. Demand remained strong throughout the year. Achievements within Water Systems were driven by a robust housing market in the U.S., strong crop prices, dry weather in some regions, and market recovery outside of the U.S. with strong demand in developing regions. Growth in the groundwater market was underpinned by residential and agricultural demand, while Fueling Systems also experienced strong sales, driven by pent-up need for infrastructure buildout in the U.S. Our Distribution business exhibited spectacular growth, both organically and through strategic acquisitions as we remain keenly focused on serving groundwater contractors.
We continued to execute on our strategy, growing as a global provider of water and fuel systems through geographic expansion and product line extensions, leveraging our global platform and competency in system design. Our commitment to this strategy has yielded outstanding results, putting us in a strong financial position. We maintained strong free cash flow and invested in working capital, all while returning tangible value to our shareholders by delivering our 30th consecutive year of increased dividends. We completed several strategic acquisitions: three in the water treatment space in the U.S., one in the U.S. groundwater distribution space and one small, dewatering pump acquisition in Australia. We feel confident that each of these acquisitions has a strong runway for growth while expanding our capabilities and footprint. While I am tremendously proud of our results in 2021, our focus now turns to the road ahead as we look to capitalize on our position by meeting customer needs and expanding the core business and geographic reach through further strategic acquisitions with a focus on Water Treatment, Distribution and Grid Solutions.
Guiding our growth strategy, our goal is to become an indispensable partner to our customers. We deliver a positive impact to the communities we operate in by expanding the availability of clean water on a global scale, innovating higher efficiency water and fuel delivery systems, as well as addressing the safety and lowest total cost of ownership in the maintenance and operation of Fueling stations. Our belief is that environmental protection and sustainability are intertwined with the long-term success of our business, and we are constantly looking for ways to increase transparency for our stakeholders.
On behalf of the management team and our Board of Directors, I want to thank all of our employees around the world for their commitment and service to our customers, coworkers, business partners and communities. We could not have had such an incredible year without all their hard work. We grew our employment base in 2021, both through organic growth of our businesses, and by welcoming new employees through acquisitions. We recognize the challenges that our employees have faced through the uncertainty of the last couple of years, and are extremely blessed to have such an engaged and enthusiastic workforce. We continue to look for ways to make their experience with Franklin more flexible, fulfilling, and to allow their diverse perspectives to be heard and celebrated. I would also like to thank our Board of Directors, who collectively provide a wealth of wisdom and experience, drive our performance through our goal-setting process, and review and approve our long-term strategic objectives and direction. We look forward to another successful year and apprising shareholders of our progress along the way.
Gregg C. Sengstack
Chairperson of the Board and Chief Executive Officer
Franklin Electric Co., Inc.
The financial information on this page about Franklin Electric Co., Inc. has previously been made available for public dissemination through press releases. The placement of such press releases on this particular page of the Franklin Electric Company website is intended to set apart and distinguish financial information from other non-financial information found on this site, including product, service, marketing and technical information. Regardless of the language used and the resulting interpretations that may or could be reached, such product, service, marketing, technical, and/or any other information found within other pages of this site should in no way be construed to be financial in nature or represent the past, current or future financial results of Franklin Electric Co., Inc.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Any forward looking statements contained herein involve risks and uncertainties, including but not limited to, general economic and currency conditions, various conditions specific to the Company's business and industry, market demand, competitive factors, supply constraints, technology factors, 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. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. We do not assume any obligation to update any forward-looking information. While we may elect to update the forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.