A strong performance from its distribution segment contributed to 13% third-quarter earnings growth for Franklin Electric Co.
The Fort Wayne-based supplier of water and fuel movement systems and components reported third quarter earnings of $33.9 million, or 72 cents per share, up from $30 million, or 63 cents per share, for the same period last year. Restructuring costs, net of tax, came to 3 cents per share, up from 2 cents per share.
The company’s third quarter sales of $348.4 million were up 2% from $341.9 million for the year-ago period.
“Our third-quarter earnings were a record for any third quarter in the company’s history. Our earnings per share grew by 14% from the third quarter 2018,” said Greg Sengstack, Franklin’s chairman and chief executive officer, said in a quarterly earnings report.
“Our improvement in earnings was led by our Distribution segment, which grew operating income by over 70% as a result of more favorable weather conditions in much of the United States and acquisitions,” he said.
“Our free cash flow after capital expenditures is about 65% higher through the first three quarters of the year versus the same period of 2018. Despite these earnings and cash generation improvements, organic sales growth was below expectations in our Water and Fueling systems businesses.”
The company’s Distribution sales rose 12% to $87 million from $78 million a year earlier as its water and fueling sales were flat at $199.8 million and $17 million, respectively.
About $7.3 million of the Distribution segment’s third-quarter sales came from business acquired during the past 12 months.
Its third-quarter operating income of $5.9 million was up from $3.1 million a year earlier. “Distribution’s operating income was higher in the third quarter due to higher sales volumes and acquisitions and leverage on operating expenses,” the report said.
Foreign currency translation drove down Franklin’s Water Systems sales 2%, which was offset by the fact that they were up 2% organically. Third-quarter operating income from the business segment was flat at $28.4 million.
The company’s record third-quarter Fueling Systems sales declined 1% compared with the prior-year quarter due to foreign currency translation, but rose 2% organically.
The segment’s sales rose 10% in the United States and Canada, mainly due to increased demand for Franklin fuel management systems and service station hardware product lines.
But, outside of the United States and Canada, the segment’s revenues fell 6%, mostly as a result of lower sales in China.
The segment’s third-quarter operating income of $21.6 million was up from $20.9 million a year earlier.
“Based on our third-quarter results and our current view of our end markets, we expect our fourth quarter to be similar to last year in both revenue and earnings,” Sengstack said.
“This would result in full year 2019 earnings per share before restructuring at the low end of our current guidance.”
During its second-quarter report the company projected its earnings per share before restructuring charges for the full year would range between $2.15 and $2.25.