Record Income and Sales
Franklin Electric reported record diluted earnings per share of $1.98 for fiscal 2005, an increase of 20 percent compared to 2004 earnings per share of $1.65 and net income was a record $46.0 million, an increase of 21 percent compared to last year’s $38.1 million.
The Company reported diluted earnings per share for the fourth quarter of $0.58, a 23 percent increase from $0.47 for the fourth quarter of 2004. Fourth quarter 2005 net income was a record $13.4 million, an increase of 22 percent from $11.0 million for the same period a year ago.
Sales for fiscal year 2005 were a record $439.6 million, an increase of $35.3 million or 9 percent compared to 2004 sales of $404.3 million. Incremental sales related to acquisitions for fiscal year 2005 were about $17.5 million or 4 percent of sales. The majority of the sales growth from acquisitions resulted from the JBD, Inc. (the former Jacuzzi Brand) pump company. Sales growth was benefited by price realization gains and solid organic growth in Water Systems pump unit shipments.
Water Systems product sales worldwide were up about 10 percent for fiscal year 2005 compared to 2004. Sales increased across all of our Water Systems product categories during the year including submersible motors, pumps, and drives and controls. Fueling Systems product sales worldwide were up slightly compared to the prior year, mostly because of strong new product sales in the fourth quarter. These included the acquisition of Phil-Tite Enterprises, a manufacturer of fuel containment equipment, our new UL 971 approved flexible pipe, and our new modular, multi-language, electronic fuel station management platform.
Fourth quarter sales were a record $114.5 million, an increase of $6.9 million or 6 percent for the same quarter of 2004. The fourth quarter of 2004 included the JBD, Inc. acquisition which closed in October 2004. Foreign currencies, particularly the euro, weakened relative to the U.S. dollar since the fourth quarter of 2004. The impact of this change in exchange rates was a $2.4 million decrease in the Company’s reported fourth quarter 2005 sales compared to the same period in 2004. The sales decrease related to currency translation was more than offset by unit volume increases for both Water Systems and Fueling Systems products as well as price realization gains in the quarter.
For fiscal year 2005, operating earnings were $70.4 million, up $10.7 million or 18 percent compared to $59.8 million a year ago. The improvement in operating earnings was primarily driven by the record sales as well as reduced manufacturing cost from the Company’s growing production base in Mexico, The Czech Republic and China. These improvements were partially offset by higher commodity costs and increased fixed costs incurred in connection with the Company’s channel strategy change for Water Systems product distribution. Operating earnings for the fourth quarter of 2005 were $20.3 million, an increase of 18 percent compared to $17.1 million a year ago. The improvement was primarily attributable to the record sales level and the reduced global manufacturing costs.
R. Scott Trumbull, Chairman and Chief Executive Officer, stated, “The people of Franklin Electric achieved record sales and earnings and made solid progress on our most important strategic initiatives. Our revenues grew across all of our product lines as we diversified our customer base by selling directly to a growing list of distributors. We also diversified our Water Systems product offering by successfully introducing three new pump brands. Largely as a result of these Water Systems brand introductions, we enter 2006 with strong sales growth momentum. We have an attractive pipeline of new products which will rollout during 2006 and will help us to sustain this momentum.
The Company is also well positioned for best quality and best cost with the completion of the first phase of our previously announced Global Manufacturing Realignment Program. The ramp-up of our new manufacturing plants in Mexico, The Czech Republic and China continues and initiatives to improve our overall product cost structure and quality will be a cornerstone of our long-term competitive strategy. Finally, Franklin enters 2006 with a strong balance sheet that positions us to capitalize on strategic opportunities within our consolidating global markets.”
In the third quarter of 2003, the Company announced the first phase of its ongoing Global Manufacturing Realignment Program; a program that is resulting in a shift of a significant amount of production to lower cost regions of the world as well as consolidating certain manufacturing operations. The Company originally projected it would incur approximately $10 million of pre-tax restructuring expenses on the first phase. This phase of the ongoing program resulted in actual pre-tax restructuring expense of $7.5 million over the two year period. The first phase of the Realignment Program is considered substantially complete at the end of 2005.
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.