Franklin Electric Co. Inc. (FELE, Financial) filed Quarterly Report for the period ended 2009-04-04.
Franklin Electric Company is the world's largest manufacturer of submersible electric motors and a leading producer of engineered specialty electric motor products and electronic controls used by original equipment manufacturers around the world in a wide variety of residential industrial and municipal applications. The principal application for Franklin's submersible electric motors is for water well pumping systems. Franklin Electric Co. Inc. has a market cap of $574.1 million; its shares were traded at around $24.94 with a P/E ratio of 13.9 and P/S ratio of 0.8. The dividend yield of Franklin Electric Co. Inc. stocks is 2%. Franklin Electric Co. Inc. had an annual average earning growth of 6.8% over the past 10 years. GuruFocus rated Franklin Electric Co. Inc. the business predictability rank of 3-star.
Cost of sales as a percent of net sales for the first quarter of 2009 and 2008 was 71.2 percent and 70.8 percent, respectively. Correspondingly, the gross profit margin decreased to 28.8 percent from 29.2 percent, a decline of only 40 basis points. Gross profit margins remained nearly unchanged in the quarter in spite of the significant sales volume reduction. The Company s gross profit was $43.2 million, down by $8.3 million from the $51.5 million in 2008. Of the $8.3 million decrease, about $15 million was the result of reduced sales. Offsetting the decline in gross profit due to lower sales were the following: $2.5 million as a result of better factory utilization, about $2 million attributable to acquisitions, and sales price increases in excess of product cost increases.
Restructuring expenses for the first quarter of 2009 were approximately $0.9 million and reduced diluted earnings per share by approximately $0.02 per share. Restructuring expenses incurred in the first quarter related primarily to the announced manufacturing optimization plan which included charges for severance and equipment relocations. Other restructuring expenses incurred in the first quarter of 2009 were related to integration expenses of a fourth quarter 2008 acquisition and other rationalization costs associated with global headcount reductions that were initiated in the first quarter of 2009 The first quarter 2009 restructuring charges were primarily cash items. The Company expects to take between $5 and $6 million in additional restructuring charges in 2009 related to the Siloam Springs relocation and other severance costs related to reductions in our global work force. Approximately 2/3 of these remaining restructuring costs will be noncash.
Net income for the first quarter of 2009 was $4.1 million compared to 2008 first quarter net income of $8.3 million. Net income attributable to Franklin Electric Co., Inc. for the first quarter of 2009 was $3.8 million, or $0.17 per diluted share, compared to 2008 first quarter net income attributable to Franklin Electric Co., Inc. of $8.1 million or $0.35 per diluted share.
Net cash used in investing activities was $19.9 million in first quarter 2009 compared to $42.7 million in first quarter 2008. The 2009 activities were primarily related to $16.8 million, net of cash acquired, used to acquire Vertical S.p.A on January 16, 2009. The acquisition was funded solely with cash. During the first quarter 2008, the Company acquired Industrias Schneider for an aggregate purchase price of $35.5 million, net of cash acquired.
Net cash provided by financing activities of $19.9 million in first quarter 2009 was primarily related to proceeds from new debt incurred, net of repayments to date. Also included was the payment of $2.9 million in dividends to its shareholders. Net cash provided by financing activities of $34.5 million in first quarter 2008 was primarily related to proceeds from new debt incurred, net of repayments to date, the repurchase of approximately 235,000 shares of its common stock for $7.8 million, and the payment of $2.8 million in dividends to its shareholders.
Read the The complete ReportFELE is in the portfolios of Richard Aster Jr of Meridian Fund, Richard Aster Jr of Meridian Fund, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
Franklin Electric Company is the world's largest manufacturer of submersible electric motors and a leading producer of engineered specialty electric motor products and electronic controls used by original equipment manufacturers around the world in a wide variety of residential industrial and municipal applications. The principal application for Franklin's submersible electric motors is for water well pumping systems. Franklin Electric Co. Inc. has a market cap of $574.1 million; its shares were traded at around $24.94 with a P/E ratio of 13.9 and P/S ratio of 0.8. The dividend yield of Franklin Electric Co. Inc. stocks is 2%. Franklin Electric Co. Inc. had an annual average earning growth of 6.8% over the past 10 years. GuruFocus rated Franklin Electric Co. Inc. the business predictability rank of 3-star.
Highlight of Business Operations:
Net sales for the first quarter of 2009 were $149.8 million, a decrease of $26.2 million or 15 percent compared to 2008 first quarter sales of $176.0 million. A major factor causing the Company s earnings decline during the first quarter of 2009 was the sales volume reduction that was experienced as a result of the continuing recession. The ongoing slump in housing combined with the customer s desire to reduce inventories contributed to soft end market demand and fewer shipments for the Company s products in the first quarter. Additionally, first quarter 2009 sales were lower by $13.3 million versus the first quarter 2008 due to foreign currency translations as a result of a stronger U.S. dollar. First quarter sales attributed to acquisitions were $6.0 million.Cost of sales as a percent of net sales for the first quarter of 2009 and 2008 was 71.2 percent and 70.8 percent, respectively. Correspondingly, the gross profit margin decreased to 28.8 percent from 29.2 percent, a decline of only 40 basis points. Gross profit margins remained nearly unchanged in the quarter in spite of the significant sales volume reduction. The Company s gross profit was $43.2 million, down by $8.3 million from the $51.5 million in 2008. Of the $8.3 million decrease, about $15 million was the result of reduced sales. Offsetting the decline in gross profit due to lower sales were the following: $2.5 million as a result of better factory utilization, about $2 million attributable to acquisitions, and sales price increases in excess of product cost increases.
Restructuring expenses for the first quarter of 2009 were approximately $0.9 million and reduced diluted earnings per share by approximately $0.02 per share. Restructuring expenses incurred in the first quarter related primarily to the announced manufacturing optimization plan which included charges for severance and equipment relocations. Other restructuring expenses incurred in the first quarter of 2009 were related to integration expenses of a fourth quarter 2008 acquisition and other rationalization costs associated with global headcount reductions that were initiated in the first quarter of 2009 The first quarter 2009 restructuring charges were primarily cash items. The Company expects to take between $5 and $6 million in additional restructuring charges in 2009 related to the Siloam Springs relocation and other severance costs related to reductions in our global work force. Approximately 2/3 of these remaining restructuring costs will be noncash.
Net income for the first quarter of 2009 was $4.1 million compared to 2008 first quarter net income of $8.3 million. Net income attributable to Franklin Electric Co., Inc. for the first quarter of 2009 was $3.8 million, or $0.17 per diluted share, compared to 2008 first quarter net income attributable to Franklin Electric Co., Inc. of $8.1 million or $0.35 per diluted share.
Net cash used in investing activities was $19.9 million in first quarter 2009 compared to $42.7 million in first quarter 2008. The 2009 activities were primarily related to $16.8 million, net of cash acquired, used to acquire Vertical S.p.A on January 16, 2009. The acquisition was funded solely with cash. During the first quarter 2008, the Company acquired Industrias Schneider for an aggregate purchase price of $35.5 million, net of cash acquired.
Net cash provided by financing activities of $19.9 million in first quarter 2009 was primarily related to proceeds from new debt incurred, net of repayments to date. Also included was the payment of $2.9 million in dividends to its shareholders. Net cash provided by financing activities of $34.5 million in first quarter 2008 was primarily related to proceeds from new debt incurred, net of repayments to date, the repurchase of approximately 235,000 shares of its common stock for $7.8 million, and the payment of $2.8 million in dividends to its shareholders.
Read the The complete ReportFELE is in the portfolios of Richard Aster Jr of Meridian Fund, Richard Aster Jr of Meridian Fund, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
