- Email: [email protected]
Franklin Electric Co Inc, USA
Pump Industry Analyst
November 2006
Franklin Electric Co Inc, USA
Gardner Denver Inc, USA
Key Figures (US$ million) Three months ended 30.9.2006
Key Figures (US$ million) Three months ended 30.9 1.10.2005
Net Sales
165.7
119.0
Cost of Sales
110.2
78.7
Gross Profit
55.4
40.3
Operating Income
26.5
20.2
Net Income
16.8
13.2
COMPANY WATCH
Nine months ended 30.9.2006
2006 Revenues Of Which: Fluid Transfer Products
414.0
356.1
87.9
60.9
Operating Earnings Of Which: Fluid Transfer Products
55.7
33.1
22.4
10.2
Net Income
32.1
16.7
Nine months ended 30.9
1.10.2005
Net Sales
439.3
325.0
Cost of Sales
293.5
217.8
Gross Profit
145.8
107.2
Operating Income
67.6
50.2
Net Income
42.9
32.6
2005
2006
2005
Revenues Of Which: Fluid Transfer Products
1229.6
845.3
259.7
163.6
Operating Earnings Of Which: Fluid Transfer Products
169.1
74.8
66.2
23.1
95.6
41.6
Net Income
COMMENT Franklin Electric Co Inc has reported record third quarter 2006 net income of US$16.8 million, an increase of 27% from US$13.2 million for the same period a year ago. Third quarter sales were a record US$166 million, an increase of US$47 million or 39% from the same quarter of 2005. Sales attributable to acquisitions, primarily the Little Giant Pump Co, contributed US$26.5 million during the third quarter. Third quarter sales, excluding the incremental sales from acquisitions were still a record at US$139 million, an increase of US$20 million or 17% on a comparable basis to last year. The record sales were primarily driven by continued increased demand for Franklin products sold to distributor customers. Global Water Systems sales (exclusive of the Little Giant acquisition) grew by
8
15% during the quarter. This sales growth occurred in spite of a North American industry-wide slowdown attributable to softness in new residential housing construction. For the third quarter of 2006, operating earnings were US$26.5 million, up US$6.3 million or 31% on a year ago. Gross profit margin for the quarter was 33.5% compared with 33.9% a year earlier, reflecting timing delays between increases in raw material costs and market prices. The company implemented price increases during the last half of the quarter which offset the increased cost of copper, steel, and other raw materials. Selling and administrative expenses increased primarily due to the inclusion of Little Giant and other selling expenses related to the company’s distributor direct sales strategy for North America. ■
COMMENT The improvement in Gardner Denver Inc’s financial results for the three-month period ended 30 September 2006 reflects incremental profitability attributable to organic revenue growth, price increases and cost reductions, including acquisition integration activities. “Our results reflect continued strength in our end market segments and my outlook remains positive. Although I expect our rate of growth to begin to slow in 2007, demand for compressor and vacuum products remains broad-based, both regionally and across product lines,” said Ross Centanni, chairman, president and CEO. Third quarter Fluid Transfer Products segment
revenues increased 44% on the same period of 2005, primarily due to stronger demand for drilling and well servicing pumps, manufacturing and supply chain improvements, incremental shipments as a result of increased outsourcing, price increases and acquisitions. As expected, orders for Fluid Transfer Products were lower in the third quarter of 2006 than the same period of the previous year due to the timing of bookings for drilling pumps and loading arms. The level of orders in the third quarter of 2005 was unusually high and represented 192% of revenues for that quarter as customers for oil and natural gas products began securing future production capacities. ■
November 2006
Franklin Electric Co Inc, USA
Gardner Denver Inc, USA
Key Figures (US$ million) Three months ended 30.9.2006
Key Figures (US$ million) Three months ended 30.9 1.10.2005
Net Sales
165.7
119.0
Cost of Sales
110.2
78.7
Gross Profit
55.4
40.3
Operating Income
26.5
20.2
Net Income
16.8
13.2
COMPANY WATCH
Nine months ended 30.9.2006
2006 Revenues Of Which: Fluid Transfer Products
414.0
356.1
87.9
60.9
Operating Earnings Of Which: Fluid Transfer Products
55.7
33.1
22.4
10.2
Net Income
32.1
16.7
Nine months ended 30.9
1.10.2005
Net Sales
439.3
325.0
Cost of Sales
293.5
217.8
Gross Profit
145.8
107.2
Operating Income
67.6
50.2
Net Income
42.9
32.6
2005
2006
2005
Revenues Of Which: Fluid Transfer Products
1229.6
845.3
259.7
163.6
Operating Earnings Of Which: Fluid Transfer Products
169.1
74.8
66.2
23.1
95.6
41.6
Net Income
COMMENT Franklin Electric Co Inc has reported record third quarter 2006 net income of US$16.8 million, an increase of 27% from US$13.2 million for the same period a year ago. Third quarter sales were a record US$166 million, an increase of US$47 million or 39% from the same quarter of 2005. Sales attributable to acquisitions, primarily the Little Giant Pump Co, contributed US$26.5 million during the third quarter. Third quarter sales, excluding the incremental sales from acquisitions were still a record at US$139 million, an increase of US$20 million or 17% on a comparable basis to last year. The record sales were primarily driven by continued increased demand for Franklin products sold to distributor customers. Global Water Systems sales (exclusive of the Little Giant acquisition) grew by
8
15% during the quarter. This sales growth occurred in spite of a North American industry-wide slowdown attributable to softness in new residential housing construction. For the third quarter of 2006, operating earnings were US$26.5 million, up US$6.3 million or 31% on a year ago. Gross profit margin for the quarter was 33.5% compared with 33.9% a year earlier, reflecting timing delays between increases in raw material costs and market prices. The company implemented price increases during the last half of the quarter which offset the increased cost of copper, steel, and other raw materials. Selling and administrative expenses increased primarily due to the inclusion of Little Giant and other selling expenses related to the company’s distributor direct sales strategy for North America. ■
COMMENT The improvement in Gardner Denver Inc’s financial results for the three-month period ended 30 September 2006 reflects incremental profitability attributable to organic revenue growth, price increases and cost reductions, including acquisition integration activities. “Our results reflect continued strength in our end market segments and my outlook remains positive. Although I expect our rate of growth to begin to slow in 2007, demand for compressor and vacuum products remains broad-based, both regionally and across product lines,” said Ross Centanni, chairman, president and CEO. Third quarter Fluid Transfer Products segment
revenues increased 44% on the same period of 2005, primarily due to stronger demand for drilling and well servicing pumps, manufacturing and supply chain improvements, incremental shipments as a result of increased outsourcing, price increases and acquisitions. As expected, orders for Fluid Transfer Products were lower in the third quarter of 2006 than the same period of the previous year due to the timing of bookings for drilling pumps and loading arms. The level of orders in the third quarter of 2005 was unusually high and represented 192% of revenues for that quarter as customers for oil and natural gas products began securing future production capacities. ■