Franklin Electric Co., Inc. (NASDAQ:FELE) Q4 2019 Earnings Conference Call February 18, 2020 9:00 AM ET CompanyParticipants Gregg Sengstack - Chairman and Chief Executive Officer John Haines - Chief Financial Officer Conference Call Participants Edward Marshall - Sidoti & Company Walter Liptak - Seaport Global Matt Summerville - D.A. Davidson & Co Operator Ladies and gentlemen, thank you for standing by, and welcome to the Franklin Electric reports Fourth Quarter and Full Year 2019 Sales and Earnings Confer ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________ FORM 10-Q _________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 0-362 FRANKLIN ELECTRIC CO., INC. (Exact name of registrant as specified in its charter) | --- | --- | |--- ...

Financial Data and Key Metrics Changes - The company reported record earnings per share (EPS) of $0.72 for Q3 2019, a 14% increase from $0.63 in Q3 2018 [14] - Total sales for Q3 2019 were $348.4 million, up 2% from $341.9 million in Q3 2018, with a revenue decline of approximately 2% due to foreign currency translation [16][24] - Free cash flow after capital expenditures increased by about 65% through the first three quarters of 2019 compared to the same period in 2018 [5][32] Business Line Data and Key Metrics Changes - Water Systems sales were $199.8 million in Q3 2019, slightly up from $199.3 million in Q3 2018, with organic sales increasing by about 2% [17][18] - Fueling Systems achieved record sales of $78.1 million in Q3 2019, a slight increase from $77.8 million in Q3 2018, with organic sales also up by about 2% [20][21] - Distribution segment sales rose to $87 million in Q3 2019 from $78 million in Q3 2018, with organic growth of about 2% [22][23] Market Data and Key Metrics Changes - In the U.S. and Canada, groundwater pump sales increased by about 1%, while sales through professional distribution channels rose by 7% overall [6] - The Water Systems business in Latin America grew organically in mid-single digits, with sales flat in Mexico but up in Brazil and significantly increased in the Southern Cone [8] - The Fueling Systems business experienced a 20% year-over-year decline in China, while growth was noted in India and Southeast Asia [9] Company Strategy and Development Direction - The company aims to continue improving its operational efficiency and market share, particularly in the Fueling Systems segment, driven by capital investments in upgrading networks [48] - The acquisition of First Sales, LLC is expected to enhance the company's position in the fragmented water treatment market [19] - Management anticipates modest growth in U.S. groundwater and surface pumping lines, with expectations for a recovery in the Chinese market [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the third quarter's earnings improvement was largely due to favorable weather conditions and acquisitions, despite organic sales growth being below expectations in some segments [4][5] - The company expects Q4 2019 results to be similar to the previous year in both revenue and earnings, with full-year EPS guidance at the low end of expectations [13] - Management expressed cautious optimism regarding the Fueling Systems segment, highlighting a robust market environment and ongoing capital investments [47] Other Important Information - The company recognized about $2.1 million in foreign exchange transaction gains, primarily due to the weakening of the Argentinean peso [28] - The effective tax rate for Q3 2019 was approximately 20%, higher than the 16% rate in Q3 2018, impacting EPS by about $0.04 [29] - The company ended Q3 2019 with a cash balance of $47.8 million, down from the previous year, primarily due to acquisitions and debt repayments [30] Q&A Session Summary Question: What drove the improved performance in the Headwater division? - Management indicated that improved weather conditions and restructuring efforts contributed to the better operating income, despite a decline in revenue [35][38] Question: What are the expectations for the Fueling Systems margins moving forward? - Management noted that positive sales mix and effective cost management are expected to sustain margins, although caution remains regarding potential shifts in product mix [42][43] Question: What factors are affecting the slowdown in the China market? - Management identified a shift towards local products and reduced capital allocation by state-owned enterprises as key factors impacting sales in China [50][51] Question: How does the groundwater business outlook look for 2020? - Management suggested that a more normalized weather year could positively impact sales, although the current trend has been relatively flat [54]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________ FORM 10-Q _________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 0-362 FRANKLIN ELECTRIC CO., INC. (Exact name of registrant as specified in its charter) Indiana jurisdictionof ...

Financial Data and Key Metrics Changes - Second quarter 2019 revenue was $355.3 million, an increase of 3% compared to $344 million in the second quarter of 2018 [24] - Fully diluted earnings per share (EPS) were $0.70 for Q2 2019, up from $0.64 in Q2 2018 [22] - EPS before restructuring expenses was also $0.70, compared to $0.65 in the same quarter last year [22] - Consolidated gross profit increased to $119.7 million in Q2 2019 from $116.1 million in Q2 2018, with a gross profit margin of 33.7% [31] Business Line Data and Key Metrics Changes - Water Systems sales were $205 million in Q2 2019, down from $211.4 million in Q2 2018, with organic sales flat year-over-year [25] - Fueling Systems sales reached a record $78 million in Q2 2019, up from $73.1 million in Q2 2018, with organic sales increasing by 7% [27] - Distribution sales increased to $87.1 million in Q2 2019 from $79.5 million in Q2 2018, with 1% organic growth [29] Market Data and Key Metrics Changes - U.S. and Canada Water Systems business saw large dewatering pump sales increase but overall groundwater pumping systems sales declined by 12% [6][7] - Water Systems business in EMENA experienced a mid-single-digit decline, attributed to industry-wide slowdowns [8] - Latin America, excluding Brazil, also saw a decline due to political instability and fragile economies [10] Company Strategy and Development Direction - The company aims to expand and diversify its customer base by end market and geography, particularly in the U.S. surface pump business [17] - Management is optimistic about the second half of 2019 despite challenges in EMENA, with expectations of improved performance in North Africa and the Middle East [18][19] - The company is focusing on reducing inter-segment inventory and improving operational efficiency following back office integration [7][16] Management's Comments on Operating Environment and Future Outlook - Management noted that the first half of 2019 results did not meet expectations, leading to a revised EPS guidance of $2.15 to $2.25 for the full year [21] - The business climate in the U.S. is described as robust, with positive feedback from the field [18] - Management expressed cautious optimism about recovery in the distribution business due to more normal weather conditions [16] Other Important Information - The company ended Q2 2019 with a cash balance of $41 million, down from the end of 2018, primarily due to acquisitions and debt repayments [36] - The effective tax rate for 2019 is expected to be around 20%, significantly higher than the 12% rate in 2018 [35] - A quarterly cash dividend of $0.145 was announced, payable on August 15 [39] Q&A Session Summary Question: Inventory levels seem higher than normal; what does this mean for pricing? - Management acknowledged that inventory levels were higher than expected due to a buildup in anticipation of sales that did not materialize, but they do not foresee an impact on pricing [40][41][43] Question: Is the slowdown in China driven by economics or trade tensions? - Management clarified that the water segment in China is small, and while there is some traction from new products, the slowdown is more related to state-owned companies scaling back capital plans [45][46] Question: How does wet weather impact the business? - Management explained that while wet weather can boost certain product lines, it has negatively affected groundwater pump replacements due to reduced usage [51][54] Question: What is the outlook for pricing versus costs in the second half of the year? - Management indicated that they expect a neutral pricing environment in the second half, with inflation in raw materials still affecting costs [77][78] Question: Is the "buy local" trend in China a government mandate? - Management confirmed that there is no formal mandate, but local suppliers are being qualified more easily, allowing them to compete [82][85]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________ FORM 10-Q _________ ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 0-362 FRANKLIN ELECTRIC CO., INC. (Exact name of registrant as specified in its charter) Indiana 35-0827455 | - ...

Financial Data and Key Metrics Changes - The company's fully diluted earnings per share (EPS) for Q1 2019 was $0.19, down from $0.45 in Q1 2018, reflecting a significant decline [16] - First quarter sales were $290.7 million, a decrease of 2% compared to $295.6 million in Q1 2018, with foreign currency translation contributing to a $12.9 million revenue decline [17] - Consolidated gross profit was $89.5 million for Q1 2019, down from $99 million in Q1 2018, with gross profit as a percentage of net sales decreasing from 33.5% to 30.8% [21] Business Line Data and Key Metrics Changes - Water systems sales decreased to $188.4 million in Q1 2019 from $192.6 million in Q1 2018, with organic sales increasing by 2% but impacted by foreign currency translation [18] - Fueling systems sales increased to $60.2 million in Q1 2019, up from $58.6 million in Q1 2018, marking a record for any first quarter [19] - Distribution sales fell to $53.3 million in Q1 2019 from $56.2 million in Q1 2018, with organic sales down about 10% primarily due to unfavorable weather conditions [20] Market Data and Key Metrics Changes - In North America, large de-watering pump sales were up but below expectations due to $2 million in orders pushed to Q2, while groundwater pumping sales declined by 5% [7] - Internationally, revenue from water systems decreased by 11% due to weakening currencies, with better growth in Brazil and Asia Pacific partially offsetting weak conditions in Europe and Central America [6][7] - The company noted a significant impact from extreme weather on the distribution segment, leading to compressed margins and increased losses [10] Company Strategy and Development Direction - The company aims to achieve consolidated organic growth of 4% to 6% for 2019, with expectations for a strong recovery in the distribution business as weather normalizes [14] - Management is focused on cost actions to offset lower profit realization, including reevaluating pricing and input cost inflation expectations [15] - The company is optimistic about the U.S. surface pump business and is expanding its customer base in the de-watering segment [12] Management's Comments on Operating Environment and Future Outlook - Management indicated that business conditions deteriorated in the North American groundwater market, leading to a year-over-year operating income decline of over 40% [6] - The outlook for the U.S. surface pump business is positive, while the European water market is expected to remain soft in the first half of the year [12] - Management reaffirmed 2019 earnings guidance of $2.37 to $2.47 per share despite a challenging first quarter [15] Other Important Information - The company ended Q1 2019 with a cash balance of $54.4 million, down $4.8 million from the end of 2018, but improved operating cash flow by $24 million compared to the previous year [28] - The company adopted a new lease standard, recognizing additional operating liabilities of about $25 million, which is non-cash in nature [29] - The company purchased approximately 58,000 shares of its common stock for about $2.5 million during Q1 2019 [30] Q&A Session Summary Question: Discussion on ramp from Q1 to Q2 - Management expects a bigger ramp from Q1 to Q2 due to normalization of weather and delayed construction activity [31][32] Question: Will the Q1 shortfall be recovered in Q2? - Management cautioned that not all of Q1's shortfall will be recovered in Q2, but they expect some recovery through Q2 and Q3 [35] Question: Long-term margin outlook for distribution and water segments - Management expects distribution margins to be between 4% to 6%, while water segment margins could be in the range of 15% to 17% [36][39] Question: Actions taken to address cost issues - Management is implementing various cost actions, including personnel reductions and sourcing strategies, to improve margins [41] Question: Clarification on maintaining EPS guidance - Management maintains the EPS guidance despite a challenging Q1, believing they can recover a portion of the shortfall in the remaining quarters [44][46] Question: Market conditions in North America for water stations - Management noted that both residential and agricultural markets were down in Q1, but early signs in April are encouraging [60][61] Question: Performance in Brazil and China - Management expressed cautious optimism about Brazil's recovery and noted that China is expected to recover in Q2 [69][75]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________ FORM 10-K _________ ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 0-362 FRANKLIN ELECTRIC CO., INC. (Exact name of registrant as specified in its charter) | --- | --- | |------------ ...

Franklin Electric Co, Inc. (NASDAQ:FELE) Q4 2018 Earnings Conference Call February 18, 2019 9:00 AM ET Company Participants John Haines - CFO Gregg Sengstack - Chairman and CEO Conference Call Participants Edward Marshall - Sidoti Ryan Connors - Boenning & Scattergood Matt Summerville - D. A. Davidson Operator Good day, ladies and gentlemen, and welcome to the Franklin Electric Reports Fourth Quarter 2018 Sales and Earnings. At this time, all participants are in a listen-only mode. Later, we will conduct a ...