Franklin Electric Reports First Quarter 2019 Sales and Earnings

Fort Wayne, IN – April 23, 2019 - Franklin Electric Co., Inc. (NASDAQ: FELE) reported first quarter 2019 GAAP fully diluted earnings per share (EPS) of $0.19, versus a GAAP fully diluted EPS in the first quarter 2018 of $0.45.  First quarter 2019 sales were $290.7 million, compared to 2018 first quarter sales of $295.6 million. First quarter EPS before the impact of restructuring expenses was $0.21 compared to 2018 first quarter EPS before restructuring of $0.45 (see table below for a reconciliation of GAAP EPS to EPS before restructuring).  In the first quarter of 2018, the Company recognized discrete income tax benefits of about $5 million which lowered the first quarter 2018 effective tax rate and resulted in an eleven-cent increase in earnings per share.

Gregg Sengstack, Franklin Electric’s Chairman and Chief Executive Officer, commented:

“Our first quarter 2019 net sales results were meaningfully below our expectations and were the primary driver of our lower earnings in the quarter.  The key factors that contributed to the lower than expected net sales included adverse winter weather conditions in North America that hurt all our operating segments, and weak international end markets primarily in Europe, the Middle East and Central America.  Our operating income before restructuring expenses declined by about $9.5 million from the first quarter 2018 due in large part to the lower sales volume and adverse sales mix, resulting in lost leverage on our fixed cost base.  Through our company wide focus on working capital reduction our operating cash flow improved by $24 million as compared to the first quarter of last year.

Despite the lower than expected demand in first quarter, we remain confident in the overall strength of the end markets in which we compete.  Our Water Systems segment is positioned well to recover the declines in North America that resulted from adverse weather and we are encouraged by higher than expected net sales results in both Brazil and Asia Pacific during the first quarter.  Although sales in our Pioneer branded dewatering equipment business and our Fueling Systems segment were also below expectations in the first quarter, we attribute this mostly to the timing of customer requested deliveries.  As a result, we are reaffirming our 2019 earnings per share guidance of $2.37 to $2.47 per share.”


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"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, epidemics and pandemics, 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, 2023, 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.