Good day, ladies and gentlemen, and welcome to the Franklin Electric Second Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Jeff Frappier, Treasurer. Please go ahead, sir.

Thank you, Danielle, and welcome, everybody, to Franklin Electric's Second Quarter 2013 Earnings Conference Call. With me today are Scott Trumbull, our Chairman and CEO; John Haines, our CFO; and Gregg Sengstack, President and COO. On today's call, Scott will review our second quarter and year-to-date business results and then John will review our second quarter and year-to-date financial results. When John is through, we will have some time for questions and answers. Before we begin, let me remind you that any forward-looking statements contained herein, including those relating to market conditions or the company's financial results, costs, expenses, expense reductions, profit margins, inventory levels, foreign currency translation rates, liquidity expectations, business goals and sales growth, involve risks and uncertainties. These risks and uncertainties include, but are not limited to, general economic and currency conditions; various conditions specific to the company's business and industry, new housing starts, weather conditions, market demand, competitive factors, changes in distribution channels, supply constraints, effective price increases, raw material costs, technology factors, integration of acquisitions, litigation, government and regulatory actions, the company's accounting policies and future trends and other risk which are detailed in the company's SEC filings and are included in Item 1A of Part I of the company's annual report on Form 10-K for the fiscal year ending December 29, 2012, Exhibit 99.1 attached thereto, and in Item 1A of Part II of the company's quarterly reports on Form 10-Q. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and except as required by law, the company assumes no obligation to update any forward-looking statements. I will now turn the call over to our Chairman and CEO. Scott?

Thank you, Jeff. We're pleased to report that our sales and earnings per share during the second quarter were the highest for any quarter in the company's history. This record performance reflects the successful implementation of 2 of the company's long-term strategies. The first is to build distribution networks in developing regions, where the markets for our Water and Fueling products are growing most rapidly. We achieved organic sales growth of about 9% in developing regions during the quarter led by robust demand in Latin America and Asia-Pacific. The second is to provide a value proposition for our customers worldwide, such that we can more than offset inflation with a combination of tight cost controls, productivity improvements and price. During the second quarter 2013, our gross profit margin increased by 170 basis points, which enabled us to achieve record earnings while continuing to invest in initiatives that will spur the company's growth in the future. Our Water Systems sales in the U.S. and Canada represented 44% of our consolidated sales and grew by 6% compared to the prior year. Residential and light commercial is our largest end-use category in the U.S. and Canada, and Water and Waste Water sales in this market increased by 9% compared to the second quarter prior year. This increase was driven by strong wastewater pump sales and a general increase in housing construction and renovation activity. Our U.S./Canada Water sales were penalized by a double-digit reduction in our Pioneer mobile pumping equipment product line. The sales reduction is attributable to a slowdown in demand for mobile pumps in the upstream oil and gas market. Based on our order backlog, we're expecting our Pioneer sales to turn around and grow at a double-digit rate during the back half of the year. Our sales of irrigation and…

Thank you, Scott. As we have previously announced, the company executed a 2-for-1 stock split effective March 18, 2013. All of the information, commentary and analysis we are providing to our shareholders in the earnings release and this conference call are using post-split share information. Our fully diluted earnings per share were $0.58 for the second quarter of 2013 versus $0.52 for the second quarter of 2012. As we note in the tables in the earnings release, the company adjusts the as-reported GAAP operating income and earnings per share for items we consider not operational in nature. We believe presenting these matters in this way gives our investors a more accurate picture of the actual operational performance company. In the second quarter 2013, we made non-GAAP adjustments that totaled about $900,000. These adjustments included $500,000 of expense primarily related to the relocation and other cost of our new engineering center and headquarters in Ft. Wayne, Indiana; $200,000 related to integration costs of the previously announced Flex-ing acquisition in Franklin Fueling Systems; $100,000 of legal fees incurred in connection with the CARB litigation; and $100,000 in other legal and advisory costs related to potential acquisition transactions. These second quarter 2013 non-GAAP adjustments round to an EPS impact of $0.01. In the second quarter of 2012, there was approximately $800,000 of cost related to the Pioneer acquisition that also resulted in a $0.01 charge to EPS. So, after considering each of these non-GAAP items, second quarter 2013 adjusted EPS is $0.59, which is 11% higher than the $0.53 adjusted EPS the company reported in the second quarter of 2012. Overall, the 2013 second quarter revenue, gross profit, operating income, net income and earnings per share were records for any quarter in the company's history. Water Systems revenues were $213.7 million in the…

[Operator Instructions] And our first question comes from Matt Summerville from KeyBank.

A couple of questions. First, as you think about your water business and Scott, you mentioned right in the beginning of your comments, about the effort to build out the distribution footprint. I think in the past, you've sized up the global submersible's addressable market or market availability, somewhere in the range of $5 billion, I don't know if you have a newer figure on that. But I guess I'm trying to get a sense over the last 3 or 4 years, what you've done via M&A, what you've done organically? How much more market are you now able to address that you were not just a couple of years ago?

Oh, well, we are looking at, company-wide, a total addressable market of about $6.3 billion. About $5 billion of that, a little over $5 billion of that, is Water, and about a little over $1 billion of it is Fueling. As we -- we've tracked acquisition versus organic growth over the last 5 years, we're -- we -- just looking at those numbers, and it was about 60% organic growth and about 40% acquisition growth over that period. And I -- we increased -- we would say that we increased our addressable market when we acquired Pioneer Pump. That was a new product line, the mobile dewatering systems product line. But generally speaking, we've been using -- we were at about $5.2 billion and we now think we're up to about $6.3 billion addressable market for the company. We have about a 12% market share -- 12%, 13%, 15% market share. And a little higher, perhaps, in Fueling and a little lower in Water. And that share has been growing steadily since we entered the pump business.

As you mentioned earlier, inventory west of the Mississippi looks okay, inventory east, maybe not so much. Are you seeing then a geographic dispersion in terms of price pressure or discounting that we need to be thinking about?

Not -- I would say, not -- first of all, we had -- did see in the U.S., more discounting activity at the quarter end in the second quarter this year than we did last year. Somewhat more. And -- but I wouldn't say that we saw a disparate behavior, in that regard, geographically. There are regions of the country that are just always more price competitive than others. And that didn't change. But I don't think that we saw -- got concentration of discounting activity. It just was -- there was just somewhat more pretty much across the board in the U.S. and Canada in the -- at the end of the second quarter.

And then with respect to the AG irrigation business down slightly in Q2, I -- that doesn't surprise me. How are you thinking about it in the back half of the year as far as comparisons? And then probably layering in a little bit of the fact that the planting season, I would imagine, overall, got pushed to the right little bit. So what should we be thinking for AG and irrigation?

I think we view the third quarter AG irrigation in the U.S. and Canada as a difficult comp. And as I mentioned, we're -- we would view a flat performance as pretty good in the U.S. and Canada for our AG irrigation business in the third quarter. And in fact, our forecast is anticipating that it will be off somewhat. Now if you look at drought maps, it's really very telling. There was a drought in the western part of the United States last year and that is continuing this year. And we're continuing -- we feel that in the West, as I mentioned, our inventories are probably in line. And demand is -- it's another good year for our products, our AG irrigation products. But last year, much of the eastern part of the United States was in drought. And this year, it's exactly the opposite. I mean there are -- there's been heavy rainfall, particularly in the southeast. And that has not -- that's been difficult. And I think coming off such a good year, our distributors prepared for another good year early in the season. And that, in the East, really hasn't materialized. So I really do believe most of our distributors in the East would say that they went into the third quarter with higher inventory than they would want and that they'll probably be in an inventory sell down, which will have an effect on our sales -- our irrigation sales in the eastern part of the United States in the third quarter. I might add though, globally, our AG -- or industrial and irrigation segment of our business is up modestly. So while we've been -- we're down modestly overall in that segment in North America, other regions of the world have grown so that we're -- our overall AG business, on a global basis, is up modestly.

What did you see in the quarter -- this will be my last question, what did you see in the quarter in your grey water business? If you said that and I missed it, I apologize.

Okay, our wastewater business was up dramatically, very strong double-digit increases, which resulted in our -- our residential and light commercial segment was up 9% in the U.S. and Canada, driven with our -- our clean water business was pretty flat, where our wastewater business was up quite dramatically. And it's the same weather patterns that have influenced our irrigation business in the East that helped our wastewater business. Also, we're really running against very easy comparisons in the -- on the wastewater side. I think you probably know, the industry was down dramatically last year and it's bouncing back this year.

And our next question comes from Mike Halloran from Robert Baird. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: Then tagging along in that, could we get the same thoughts on the groundwater trends? I mean, exclusive of the AG business, which you've gone into a fair amount of detail on, just the core residential side versus maybe the larger inch products there. What kind of trends you're seeing across those end markets? And if you've seen any sort of different trends, acceleration, deceleration as you work through the second quarter?

Yes, I mean, our waste -- our Water residential light-commercial, Water, wastewater business was up high-single digits on a global basis. So that segment of our business is growing nicely and that's nominal growth. So I -- if you backed out the currency, it's probably a double-digit increase. Our industrial and irrigation segment, the larger pumps are up 1% or 2% on a global basis. So most of our growth this year is coming in the residential light-commercial area and we're flat to up modestly in the industrial and irrigation part of the business. And a lot of the growth, on the residential side, as I mentioned, is in wastewater -- the wastewater pumps. We're also getting really attractive growth performance out of our business in Brazil and a lot of that is smaller residential light-commercial-type pumping systems as well. So I'd say wastewater in North America and residential light-commercial kind of clean Water pumping systems in developing regions with Brazil probably being the biggest star. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: I suppose I should have narrowed down. I was specifically talking about U.S. groundwater, regular water, not wastewater trends, and how those track through the quarter?

Yes, I would say our groundwater shipments in the U.S. and Canada, in total, were up low-single digits. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: And did you see any difference or trends as you tracked through the quarter? Or were those pretty consistent as you worked your way through?

You mean, month-by-month in the second quarter? Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: Yes, or even month-by-month through the front half of the year and if you saw any change in patterns or anything?

Okay. Well, of course, the first quarter is always weaker than the second quarter. But what -- I would say, we came in pretty close to forecast in our business in the first quarter and pretty close to our forecast in our -- for our groundwater business in the second quarter as well. There's always an uptick at the end of the quarters in both businesses -- in both quarters, I mean. I mean, usually March is the strongest month in the first quarter, and June is the strongest month in the second quarter, and that was certainly the case this year as well. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: So in other words, you're saying it's tracking pretty consistent with normal seasonality at this point?

Yes. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then on the rebranded Cerus business, any update on that piece and where the main efforts are going right now to integrate it with your core product portfolio and how that's progressing?

Yes. We are in the process of training our sales force on the water side of our business and our distributor sales forces to sell the Cerus product line of higher horsepower drives, controls, starters. And in many instances, when somebody -- an end-user buys a pumping system, the water well contractor will drill the well and install the pump and motor. But in many instances, a electrical contractor might be called in to install the drive and control package. And we're sort of taking a different path. We're training up our distributors to be able to do the entire installation. And this is being very well received in -- among our customer base. And our sales, our Cerus sales, of course, we haven't lapped full year of ownership yet, but year-on-year, Cerus' sales through the groundwater pump distribution channels are up dramatically. And we think long term, this is going to be a big area of growth for us. So right now, we're incurring some material extra costs flying people all over the country to training sites to learn the details of this product line, how to install it, how to service it, how to sell it. But we're very encouraged by the reception that we're getting and the early sales results.

And our next question comes from David Rose from Wedbush Securities.

A couple of questions that I may have missed here. It seems like you talked about additional distribution in Bogota, but you didn't mention anything in India. Did I miss that? Has that been pushed out? And Australia, I don't think you mentioned that. And then into U.K., you have 4 locations up. The last time we spoke that you were potentially thinking about a fifth location. Maybe you could provide us some thoughts on your expansion into the back half of this year. And then, as it relates to your guidance on that dewatering business, it's clearly a higher margin business for you. So what are your thoughts as you -- what went into your thoughts, I guess, is a better way to ask in terms of your guidance for the third quarter on the margin side, given that you probably have a meaningful lift on your watering margin business?

Okay. First, we are -- we indicated, I think, that we're opening -- actually, we're opening 5 new Water Systems -- or 5 new distribution centers. Four of them are Water Systems distribution centers in developing regions, including São Paulo, and Bogota, Zambia and Delhi, India. And all of those will be opened by the end of this year. And they're -- we're on track with acquiring the real estate, hiring the people and starting to fill the warehouses and get feet on the street to sell those products, bearing in mind that most of our groundwater shipments are really emergency replacement shipments. Difficult to predict the precise mix of product that needs to be available in the market to serve it well because of the emergency replacement nature of the demand pattern. So when we have a distribution center in a region of the world, we always see a significant increase in sales because of the improved availability of our product. And so we -- we're kind of identifying those large developing markets that we believe can justify the overhead of a Franklin distribution center and we're building out those distribution centers in those markets. And these are the 4 that we're opening this year. So we're excited about having these things up and operating as we go into next year. Another initiative of the company has been to enter the pump rental business. And we elected to enter the pump rental business in the U.K. because, quite frankly, we have the -- we were approached by an experienced management team and -- that has deep knowledge of the pump rental market in the U.K. and contacts, et cetera, and we felt that we could -- we should fund them, because we had an interest in entering the pump…

Yes, that's helpful. You didn't -- I think there's one other point we hadn't heard in the call is a little bit more color on the artificial lift stations, if I may ask?

Yes. We have -- most of the people who follow the company know Franklin has developed a artificial lift system, a system for dewatering oil and gas wells. Many oil and gas wells, in order to function, have to have the groundwater pumped out of them. And most the, Franklin included, groundwater pumping companies have not had systems that would operate at the depths that are required to dewater an oil and gas system. We've developed a cost effective, very reliable system for doing that. The product was in beta test last year. We declared it commercial at the beginning of this year. The way our customers in this market work, they are interested in our system but are interested in seeing it operate in a few wells that they may own for a year or so before they'll agree to go with it broadly. So we have known that 2013 was going to be a year of making a few installations -- demonstration installations with customers. We think that these installations are going well. We're encouraged that in the back half of this year, we have several installations going in with customers that, with success, could become very material customers for Franklin in probably the back half of 2014 and beyond. So we see this business building as we go into 2014 and becoming a more material part of the company. But for 2013, it's really not -- it won't really be an important part of our growth story in 2013.

But no change in your outlook for the first quarter?

No, no change in our outlook.

Thank you, and that is all the time we have for questions. I would now like to turn the call back to CEO, Scott Trumbull, for any further remarks.

Thank you very much for attending our conference call, and we look forward to speaking with you at the end of our third quarter.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.