Franklin Electric (FELE), a manufacturer of water and fuel pumping systems, has announced a 3.77 percent drop in profit for the quarter ended Jun. 28, 2014. The company earned $27.07 million or $0.55 a share in the second-quarter compared with $28.14 million or $0.58 a share a year ago. Adjusted loss per share met the analysts' expectation of $0.60.
Revenue during the second-quarter climbed 7.98 percent to $284.47 million from $263.44 million in the last year period.
Gross margin contracted by 97 basis points over the last year period to 34.94 percent. Total expenses as a percentage of revenues increased to 86.25 percent from 84.55 percent in the same period last year. That has resulted in contraction of 170 basis points in operating margins to 13.75 percent.
The company reported operating income of $39.13 million, compared with $40.71 million in the previous year period.
Gregg Sengstack, Franklin Electric's chief executive officer, said, ''We are pleased to report that our sales and adjusted net income for the second quarter of 2014 were again records for any quarter in the company's history. During the second quarter 2014, our consolidated operating income after non-GAAP adjustments grew by 3 percent compared to the second quarter of 2013 driven by a 25 percent increase in Fueling Systems operating income, a near doubling of Pioneer Pump sales globally and double digit earnings growth of our Water Systems businesses in Europe and the Middle East.''
Commenting on the outlook for the third quarter of 2014, Sengstack said, ''In the third quarter, we estimate that our Fueling Systems sales and adjusted operating earnings will grow by 8 to 10 percent; therefore sequentially, we expect our Fueling Systems business to have similar revenue and operating income that was achieved in the second quarter. Finally, our consolidated adjusted earnings per share growth is expected to be in the 3 to 5 percent range.''
Cash Flow
Franklin Electric has spent $26.24 million cash to meet operating activities during the first half, as against cash outgo of $5.61 million in the last year period.
The company has spent $55.13 million cash to meet investing activities during the first half, as against cash outgo of $36.63 million in the last year period. It has made net capital expenditure of $52.85 million during the first half, which was higher by 43.03 percent or $15.90 million, from a year ago.
The company has generated cash of $34.64 million from financing activities during the first half, up 85.78 percent or $15.99 million, when compared with the last year period. It has borrowed net of $49.94 million through debt during the first half. It has spent net of $5.29 million on repurchase of common stocks.
The company's cash dividend payment increased 23.96 percent or $1.70 million to $8.82 million.
As on Jun. 28, 2014, the company's cash balance stood at $87.68 million, up 13.74 percent or $10.59 million from Jun. 29, 2013.
Working Capital
Franklin Electric has witnessed an increase in the working capital over the last one year. The company's working capital stood at $331.42 million as at Jun. 28, 2014, up $11.35 million or 3.55 percent from $320.07 million on Jun. 29, 2013. It registered a decrease in current ratio to 2.60 as at Jun. 28, 2014 from 3.33 on Jun. 29, 2013.
Debt Position
Franklin Electric has witnessed an increase in the total debt over the last one year. As on Jun. 28, 2014, total debt stood at $245.17 million, up 27.50 percent or $52.88 million, from Jun. 29, 2013. The company's total debt was 21.02 percent of total assets as on Jun. 28, 2014, compared with 18.92 percent on Jun. 29, 2013.
Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has declined to 15.59 from 15.93 in the same period last year.
Shares of the company declined $0.53 or 1.37 percent to settle at $38.14 on Monday.