Franklin Electric Co., Inc. (NASDAQ:FELE) Q2 2022 Earnings Conference Call July 26, 2022 9:00 AM ET

Company Participants

Jeff Taylor - Chief Financial Officer

Gregg Sengstack - Chairperson and Chief Executive Officer

Conference Call Participants

Matt Summerville - D.A. Davidson

Walter Liptak - Seaport Global

Operator

Hello and thank you for standing by. Welcome to the Franklin Electric Reports Second Quarter 2022 Sales and Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce Chief Financial Officer, Jeff Taylor.

Jeff Taylor

Thank you, Andrew and welcome everyone to Franklin Electric’s second quarter 2022 earnings conference call. With me today is Gregg Sengstack, our Chairperson and CEO. On today’s call, Gregg will review our second quarter business highlights and I will review our second quarter financial performance in more detail. When we are through, we will have time for questions and answers.

Before we begin, let me remind you that as we conduct this call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, many of which could cause actual results to differ materially from such forward-looking statements. A discussion of these factors may be found in the company’s annual report on Form 10-K and in today’s earnings release. All forward-looking statements made during this call are based on information currently available and except as required by law, the company assumes no obligation to update forward-looking statements.

With that, I will now turn the call over to our Chairperson and CEO, Gregg Sengstack.

Gregg Sengstack

Thank you Jeff, and thank you all for joining us. We gained momentum in the second quarter leveraging strong demand around the globe in a normal seasonal uptick resulting in record results including the highest consolidated net sales, operating income and EPS for any quarter in Franklin Electric’s history. It requires tremendous teamwork and commitment to deliver these results, and I want to thank our global team whose execution and dedication drove these results. Let me cover a few highlights for the quarter before I talk about each business segment.

First, demand remains strong across the company’s markets with all three businesses experiencing strong double-digit topline growth organically, which reflects the growing need for our Water and Fueling System products. Our backlog has remained elevated at approximately $290 million essentially flat in the prior quarters.

Another bright spot this quarter and adjustment to our team’s discipline was the sequential margin improvement we delivered with operating margin expanding in all three businesses as a result of price catching up with inflation, improved operating leverage and the team’s relentless focus on the cost controls especially in SG&A.