Franklin Electric Co., Inc. (NASDAQ:FELE) Q4 2019 Earnings Conference Call - Final Transcript

Feb 18, 2020 • 09:00 am ET

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Franklin Electric Co., Inc. (NASDAQ:FELE) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
John J. Haines

rate net of discrete events was about 13.5%, slightly lower than the 2018 effective tax rate of about 14%. The 2019 full year effective tax rate is about 18% compared to the 2018 full year tax rate of about 12.5%. For the full year of 2020, the company expects the effective tax rate net of discrete events to be between 18% and 20%. The company ended the fourth quarter of 2019 with a cash balance of $64.4 million, which was $5.2 million higher than at the end of 2018. The company had $19 million in borrowings on its revolving debt facilities at the end of the fourth quarter of 2019 and $77 million in borrowing at the end of the fourth quarter of 2018.

As of January 1, 2019, the company adopted the new lease standard and has recognized additional operating liabilities of about $28 million for its outstanding operating leases with corresponding right-of-use assets of the same amount. The impact of this new accounting standard is non-cash in nature and does not affect the company's cash position. The company does not consider the impact of this standard to be material to the consolidated results of operation or to the cash flows.

Cash from operations for 2019 was about $178 million compared to $128 million in 2018, an increase of $50 million or almost 40%. Our free cash flow, cash from operations less capital expenditures net of proceeds from the sale of property, plant and equipment is about $157 million and is 163% of net income compared to about 100% for the full year 2018. This improvement in cash flow is primarily due to reductions in working capital, which remains a key strategic focus for the company. The company did not repurchase any shares of its common stock in the open market during the fourth quarter of 2019. At the end of the fourth quarter of 2019, the total remaining authorized shares that may be repurchased is about 1.3 million.

On January 27, the company announced a quarterly cash dividend of $0.155, a 7% increase from the 2019 dividend. The dividend will be paid February 20, to shareholders of record on February 6. This concludes our prepared remarks and we would now like to turn the call over for questions.