Franklin Electric Reports Record Income and Sales
Franklin Electric Co., Inc. reported record second quarter 2005 net income of $13.5 million, an increase of 25 percent from $10.9 million for the same period a year ago. Diluted earnings per share were $0.59 compared to $0.48 for the second quarter of 2004.
Sales for 2005 were also a second quarter record $123.5 million, an increase of $17.4 million or about 16 percent from $106.1 million for the same period a year ago. Foreign exchange rates accounted for $1.1 million of the increase.
Operating earnings in the second quarter of 2005 were a record $20.9 million, up $3.8 million or 22 percent compared to $17.1 million a year ago. The improvement in operating earnings was primarily driven by the record sales and was partially offset by the increased costs of certain commodities used in the manufacture of electric motors and costs incurred in connection with the company’s distribution channel strategy change and the global manufacturing realignment program.
R. Scott Trumbull, Chairman and Chief Executive Officer, stated, “We are pleased with our second quarter financial results as well as with the sales mix that we are achieving. During 2004, 40 percent of our sales were to two major pump OEMs, while this year these two customers accounted for about one quarter of our sales. As our distributor pump and motor sales continue to grow rapidly, we expect the major pump OEM customers will continue to represent a smaller portion of our overall sales mix.
Also, as we continue the implementation of our Global Manufacturing Realignment Program, our production mix is improving. In the second quarter of this year about 22 percent of our global water systems manufacturing man-hours were in low cost countries (Mexico, Czech Republic, and China) versus about 13 percent in second quarter last year. This percentage will increase significantly during the balance of 2005 and 2006 as we continue to ramp up our motor and component manufacturing in these countries. Also, during the second quarter this year we broke ground on a new pump manufacturing facility located adjacent to our motor plant in Linares, Mexico.”
Water system product sales worldwide were up about 21 percent compared to the second quarter of 2004. The growth was attributable to increasing unit sales of pumps and motors, as well as improved sales mix due to growing volume sold directly to distributors. During the quarter Franklin introduced 3 new pump brands—SCHAEFER™, AQUADUTY™, and J-CLASS™. The company is in the process of establishing nationwide distributor networks for each of these brands.
Fueling system product sales worldwide during the second quarter, recovering from a soft first quarter, were comparable to the same period in the prior year. During the second quarter Franklin Fueling Systems introduced its new electronic tank gauging and monitoring product (TS-5 SERIES). The new product is being performance tested by major petroleum marketers worldwide.
Franklin Electric is a global leader in the production and marketing of groundwater and fuel pumping systems and is a technical leader in submersible motors, drives, controls, and monitoring devices.
Source: Franklin Electric Co., Inc.