Financial Performance - The company reported a revenue growth of 20% for the third quarter of 2025, marking the 19th consecutive quarter of double-digit growth [4][5] - Organic growth was 4.8%, with adjusted EBITDA growing by 22% and adjusted EBITDA margins expanding by 26 basis points [5][6] - GAAP EPS was $1.76, while adjusted EPS was $2.87, which would have been $0.22 higher if adjusted for intra-quarter revenue seasonality [5][6] Segment Performance - The brokerage segment saw reported revenue growth of 22% and organic growth of 4.5%, with adjusted EBITDA margin remaining flat year-over-year at 33.5% [6][19] - Employee benefits experienced around 1% organic growth, primarily due to lower-than-expected large life cases [7] - The risk management segment, Gallagher Bassett, reported an 8% revenue growth, including 6.7% organic growth, with an adjusted EBITDA margin of 21.8% [11][21] Market Dynamics - Global insurance renewal premium changes showed property down 5% and casualty lines up 6%, indicating a bifurcated market where larger clients are seeing premium decreases while smaller clients are experiencing increases [8][9] - The reinsurance market remains healthy with adequate capacity, and the company anticipates stable conditions for January 1 renewals [9][10] - The company noted solid demand for employee benefits due to the resilient U.S. labor market and rising health insurance costs [10] Strategic Direction - The company is focused on a two-pronged revenue growth strategy involving organic growth and mergers & acquisitions, with a strong emphasis on integrating AssuredPartners [4][12] - The management expressed confidence in the company's competitive positioning, leveraging proprietary data and analytics to enhance service offerings [11][12] - The company completed five new mergers, contributing approximately $40 million in estimated annualized revenue, bringing the year-to-date total to over $3.4 billion [13] Management Commentary - Management remains optimistic about the operating environment, citing solid client business activity and no signs of an economic downturn [10][11] - The company expects fourth quarter organic growth around 5%, leading to a full-year organic growth of over 6% [11][19] - Management highlighted the importance of maintaining a strong company culture to drive success and integration post-acquisition [14] Other Important Information - The company anticipates annualized run-rate synergies of $160 million by the end of 2026 and $260 million-$280 million by early 2028 from the AssuredPartners acquisition [24] - The company has approximately $10 billion available for future M&A funding, indicating a strong position for growth [25] Q&A Session Summary Question: Clarification on AssuredPartners' new business and synergies - Management clarified that revenue synergies from AssuredPartners will be credited to their P&L, while broader base contingent commissions will impact legacy Gallagher's organic growth [29] Question: Outlook for organic growth in 2026 - Management indicated that 2026 could resemble 2025, with strong performance expected in reinsurance and property & casualty businesses [30] Question: M&A pipeline post-AssuredPartners acquisition - Management stated that the M&A pipeline from AssuredPartners has not yet been fully integrated but is expected to present opportunities [31][32] Question: Organic growth expectations in a shallow pricing environment - Management acknowledged that a 4%-6% organic growth rate is achievable, with potential for upper-end performance due to strong wholesale and reinsurance businesses [41][42] Question: Property market outlook - Management expressed a stable outlook for the property market, with expectations of continued pressure but no dramatic decreases anticipated [82][84]

Financial Performance - The company achieved a revenue growth of 20% in Q3 2025, marking the 19th consecutive quarter of double-digit growth [4][5] - Organic growth was reported at 4.8%, with adjusted EBITDA growing by 22% and adjusted EBITDA margins expanding by 26 basis points [5][11] - GAAP EPS was $1.76, while adjusted EPS was $2.87, which would have been $0.22 higher if adjusted for intra-quarter revenue seasonality [5][11] Brokerage Segment Performance - The brokerage segment reported a revenue growth of 22%, with organic growth at 4.5% [6][11] - Within retail operations, property and casualty organic growth was 5%, with U.S. growth exceeding 7% [6][7] - Employee benefits showed around 1% organic growth, while wholesale and specialty businesses delivered 5% organic growth [7][11] Risk Management Segment Performance - The risk management segment, Gallagher Bassett, saw an 8% revenue growth, including 6.7% organic growth [11][12] - Adjusted EBITDA margin for this segment was reported at 21.8%, slightly better than previous expectations [12][21] Market Dynamics - The global insurance renewal premium changes showed property down 5% and casualty lines up 6% overall, indicating a mixed pricing environment [8][9] - The company noted a bifurcation in renewal premium changes by client size, with smaller clients seeing a 3% increase while larger clients experienced a 1% decrease [9][10] - The reinsurance market remains healthy with adequate capacity, and the company anticipates stable conditions for January 1 renewals [10][11] Strategic Direction and M&A Activity - The company is focused on a two-pronged revenue growth strategy involving organic growth and mergers & acquisitions (M&A) [4][12] - Since acquiring AssuredPartners, the company has completed five new mergers, contributing approximately $40 million in estimated annualized revenue [12][13] - The company has a pipeline of about 35 term sheets signed or being prepared, representing around $400 million of annualized revenue [13][25] Management Commentary on Future Outlook - Management expressed confidence in the company's positioning for growth despite economic uncertainties, with expectations of around 5% organic growth in Q4 [10][11] - The company anticipates full-year margins around 21% for Gallagher Bassett, indicating a strong performance outlook [12][21] - Management highlighted the importance of maintaining a client-centric culture and leveraging proprietary data and analytics for competitive advantage [11][14] Q&A Session Summary Question: Regarding AssuredPartners and new business - Management clarified that revenue synergies from AssuredPartners will be credited to their P&Ls, while broader base contingent commissions impacting legacy Gallagher will be included in organic growth [29] Question: Organic growth outlook for 2026 - Management indicated that 2026 could resemble 2025, with strong performance expected in reinsurance and property & casualty businesses [30] Question: M&A pipeline post-AssuredPartners acquisition - Management noted that it is still early to assess the full impact of AssuredPartners on the M&A pipeline, but there is optimism for future opportunities [31][32] Question: Market conditions and pricing dynamics - Management acknowledged that while casualty pricing remains stable, there is a mixed environment with property pricing showing some relief [60][62] Question: Employee benefits and new business acquisition - Management expects strong performance in employee benefits due to rising medical costs and a competitive labor market, which will drive new business opportunities [72][74]

Financial Performance - The company achieved a revenue growth of 20% in Q3 2025, marking the 19th consecutive quarter of double-digit growth [3][4] - Adjusted EBITDA grew by 22%, with adjusted EBITDA margins expanding by 26 basis points [4] - GAAP EPS was reported at $1.76, while adjusted EPS was $2.87, which would have been $0.22 higher if adjusted for intra-quarter revenue seasonality [4] Business Segment Performance - The brokerage segment reported a revenue growth of 22%, with organic growth at 4.5% [5] - Employee benefits experienced around 1% organic growth, impacted by lower-than-expected large life cases [6] - The risk management segment, Gallagher Bassett, saw an 8% revenue growth, with organic growth at 6.7% [11][20] Market Dynamics - Global insurance renewal premium changes showed property down 5% and casualty lines up 6% overall, indicating a mixed pricing environment [8][9] - The company noted a bifurcation in renewal premium changes by client size, with smaller clients seeing a 3% increase while larger clients experienced a 1% decrease [9] - The reinsurance market remains healthy with adequate capacity to meet expected demand [10] Strategic Direction and Competitive Landscape - The company is focused on a two-pronged revenue growth strategy, emphasizing both organic growth and mergers & acquisitions [3] - The integration of AssuredPartners is seen as a significant opportunity for value creation, with a strong emphasis on collaboration and shared resources [12][13] - The company aims to leverage its extensive data and analytics capabilities to enhance competitive positioning [11] Management Commentary on Economic Environment - Management expressed confidence in the company's positioning to grow despite market conditions, citing solid client business activity and positive revenue indications [10][11] - There are no signs of an economic downturn, and the company anticipates continued organic growth in the brokerage segment [11][20] - Management highlighted the importance of addressing rising health insurance costs for clients as a key focus area [10] Other Important Information - The company completed five new mergers in the year, contributing approximately $40 million in estimated annualized revenue [13] - The pipeline for future M&A includes about 35 term sheets signed or being prepared, representing around $400 million in annualized revenue [13] Q&A Session Summary Question: Regarding AssuredPartners and new business - Revenue synergies from AssuredPartners will be credited to their P&L, while broader base contingent commissions may impact legacy Gallagher's organic growth [25] Question: Organic growth outlook for 2026 - Management is comfortable that 2026 could resemble 2025, with strong performance expected in reinsurance and P&C businesses [26] Question: M&A pipeline post-AssuredPartners acquisition - The M&A pipeline from AssuredPartners has not yet been integrated, but there is optimism about future opportunities [27][28] Question: Pricing dynamics in the market - Management noted that while casualty pricing increases are stabilizing, property pricing is experiencing downward pressure [39][45] Question: Employee benefits outlook - The fourth quarter is expected to be strong for employee benefits, driven by talent retention strategies and managing rising health insurance costs [47][48]

Financial Data and Key Metrics Changes - Total assets reached a record $2.3 trillion, driven by the acquisition of Commonwealth Financial Network and solid organic growth, with organic net new assets of $33 billion, representing a 7% annualized growth rate [3][4] - Adjusted EPS for Q3 was $5.20, an increase of 25% year-over-year, with gross profit of $1,479 million, up $175 million sequentially [4][14] - Adjusted pre-tax margin was approximately 38%, reflecting the combination of organic growth and expense discipline [14] Business Line Data and Key Metrics Changes - Recruited assets in Q3 were $33 billion, contributing to a record $168 billion over the trailing 12 months [4][14] - In the traditional independent market, approximately $12 billion in assets were added during Q3, maintaining industry-leading capture rates despite low advisor movement [4][5] - The acquisition of Commonwealth Financial Network added $275 billion in assets during Q3, with nearly 80% of assets retained [13][18] Market Data and Key Metrics Changes - Client cash balances ended the quarter at $56 billion, up $5 billion, with $4 billion attributed to Commonwealth Financial Network [15] - The mix of fixed-rate balances in the ICA portfolio was approximately 60%, with an ICA yield of 351 basis points, up 9 basis points from Q2 [15][16] Company Strategy and Development Direction - The company aims to be the best firm in wealth management, focusing on client centricity, empowering employees, and improving operating leverage [9][10] - Plans to streamline services and adjust pricing to align with market value, enhancing the value proposition for advisors [10][17] - Continued focus on onboarding Commonwealth Financial Network and enhancing capabilities for all advisors [9][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing integration of Commonwealth Financial Network and the positive cultural alignment [25][27] - The company anticipates a return to historical norms in advisor movement, which could lead to higher organic growth in future quarters [46][48] - Management remains optimistic about the long-term growth trajectory and the ability to capture market share [48][62] Other Important Information - The company is focused on maintaining a strong capital position, with share repurchases paused until after the Commonwealth onboarding [21] - The expected run rate EBITDA for Commonwealth Financial Network is approximately $425 million once fully integrated [18] Q&A Session Summary Question: Update on Commonwealth integration and recruiting focus - Management confirmed that the integration is progressing well, with nearly 80% of assets retained, and plans to refocus recruiting efforts externally as retention improves [24][26] Question: Clarification on pricing changes and margin benefits - The 100-basis point improvement in margin is solely from pricing changes, with additional cost efficiencies expected to contribute further [30][31] Question: Timeline for achieving 90% retention target - The timeline for achieving the 90% retention target aligns with the onboarding of Commonwealth, expected in Q4 2026, but could occur sooner [32] Question: Progress on alternative investment capabilities - The company has significantly expanded its alternative investment offerings and is on track to have 120 alternatives available for sale by the end of the year [50][52] Question: Expectations for TA rates and advisor movement - Management expects TA rates to decrease as interest rates decline, with advisor movement anticipated to return to historical norms [56][57]

Financial Data and Key Metrics Changes - The company reported diluted EPS of $6.57 and revenues of $4.3 billion, representing a 16.4% increase from the prior year period [6][13] - Operating margin was exceptional at 9.4%, with strong operating cash flow of $475.5 million [6][24] - The book-to-bill ratio was 1.16, with record RPOs at $12.6 billion, an increase of $2.8 billion year over year [7][10] Business Line Data and Key Metrics Changes - U.S. electrical construction revenues were $1.29 billion, increasing by 52.1% due to strong organic growth and the acquisition of Miller Electric [15] - U.S. mechanical construction revenues reached a record $1.78 billion, up 7% primarily through organic growth driven by data center demand [16] - U.S. building services revenues were $813.9 million, reflecting a 2.1% increase year over year, with mechanical services growing by 5.8% [17] - Industrial services revenues were $286.9 million, consistent with the previous year, while UK building services generated revenues of $136.2 million, up 28.1% [18] Market Data and Key Metrics Changes - RPOs within network and communications totaled a record $4.3 billion, almost double the year-ago period [10] - Healthcare RPOs totaled $1.3 billion, with nearly 7% growth year over year due to the acquisition of Miller Electric [11] - Manufacturing and industrial RPOs reached $1.1 billion, benefiting from onshoring and reshoring initiatives [11] Company Strategy and Development Direction - The company is focused on capital allocation with discipline, having allocated over $430 million on share repurchases and $900 million for acquisitions in the first nine months of 2025 [7] - The sale of the UK business for approximately $255 million is expected to close by year-end, allowing the company to sharpen its focus on core U.S. markets [25][26] - The acquisition of John W. Danforth Company is anticipated to add $350 million to $400 million in revenues, enhancing capabilities in data centers and healthcare [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong operating margins and the diverse demand across sectors, particularly in data centers, healthcare, and traditional manufacturing [29] - There is acknowledgment of macroeconomic uncertainties, including tariffs and trade issues, but the company remains disciplined in capital allocation [29] - The guidance for 2025 revenue has been updated to a range of $16.7 to $16.8 billion, reflecting business momentum while adjusting for the anticipated sale of the UK segment [28] Other Important Information - Gross profit increased by 13.7% to $835.3 million, with a gross profit margin of 19.4% [22] - SG&A expenses increased by $58.4 million, primarily due to incremental expenses from acquired companies and increased headcount to support growth [22] Q&A Session Summary Question: Margin profile this quarter - Management noted that the operating margins are among the strongest seen, with electrical margins expected to be over 14% without amortization headwinds [36][37] Question: Strength in other sectors outside data centers - Management highlighted strong growth in mechanical services, healthcare, and traditional manufacturing, indicating broad-based demand [40][41] Question: Impact of geographic investments on margins - Management confirmed a $13 million impact on margins due to geographic investments, indicating ongoing adjustments in the portfolio [57] Question: Capital allocation and lack of buybacks - Management clarified that the lack of buybacks was due to prior execution and a balanced approach to capital allocation, with no constraints on capital [67][70] Question: Organic growth expectations - Management indicated that high single digits to low double digits organic growth is a comfortable expectation, considering the size of the company [74][75] Question: Larger individual bookings in network and communications - Management confirmed that contracts are getting larger, particularly in cloud storage and AI sites, but emphasized that RPOs only include contracted work [95][96]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $6.57, a 13.3% increase from $5.80 in the prior year [22] - Revenues reached $4.3 billion, marking a 16.4% increase year-over-year, with organic growth contributing 8.1% [6][13] - Operating margin was 9.4%, with operating income of $405.7 million, reflecting strong performance across segments [18][22] Business Line Data and Key Metrics Changes - U.S. electrical construction revenues were $1.29 billion, up 52.1%, driven by strong organic growth and the acquisition of Miller Electric [15] - U.S. mechanical construction revenues reached a record $1.78 billion, increasing 7% primarily due to data center demand [16] - U.S. building services revenues were $813.9 million, reflecting a 2.1% increase year-over-year, with mechanical services growing 5.8% [17] Market Data and Key Metrics Changes - Remaining Performance Obligations (RPOs) reached a record $12.6 billion, a 29% increase year-over-year, driven by robust demand in data centers and healthcare [7][10] - RPOs in network and communications totaled $4.3 billion, nearly double from the previous year [10] - Healthcare RPOs grew to $1.3 billion, supported by the acquisition of Miller Electric [11] Company Strategy and Development Direction - The company is focusing on capital allocation with discipline, having allocated over $430 million for share repurchases and $900 million for acquisitions in the first nine months of 2025 [7] - The planned divestiture of the U.K. business for approximately $255 million aims to sharpen focus on core U.S. markets and support balanced capital allocation [25][26] - The acquisition of John W. Danforth Company is expected to add $350 million-$400 million in revenues, enhancing capabilities in data centers and healthcare [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong operating margins, despite macroeconomic uncertainties such as tariffs and potential government shutdowns [30] - The company anticipates continued demand in key sectors, particularly data centers, healthcare, and traditional manufacturing [30] - Management indicated that organic growth rates may stabilize in the high single digits to low double digits, reflecting the law of large numbers [74] Other Important Information - The company generated operating cash flow of $475.5 million during the quarter, with a strong balance sheet of $655 million in cash [24] - SG&A expenses increased by $58.4 million, primarily due to incremental expenses from acquired companies and increased headcount to support growth [22] Q&A Session Summary Question: Margin profile concerns - Management acknowledged strong operating margins and clarified that the current margins reflect ongoing investments and market conditions [35][36] Question: Growth in sectors outside data centers - Management highlighted strong growth in mechanical services, healthcare, and traditional manufacturing, indicating broad-based demand [39][40] Question: Impact of geographic investments on margins - Management confirmed that geographic investments had a notable impact on margins, estimating around $13 million in costs related to new market entries [57] Question: Capital allocation and buybacks - Management explained the lack of buybacks in the quarter was due to prior execution and emphasized a balanced approach to capital allocation [66][68] Question: Organic growth expectations - Management projected organic growth in the high single digits, with potential for slight increases due to strong RPO growth [74][76]

Core Insights - The company reported record quarterly results for revenue, adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share, with a revenue growth of 22% driven primarily by recent acquisitions [4][5][33] - The acquisition of Mars Parts, valued at $650 million, is expected to close soon and will enhance the company's HVACR product offerings, contributing to future growth [2][26][34] - Despite facing headwinds in the residential HVACR market, the company maintained a resilient balance sheet and continued to pursue growth opportunities through strategic acquisitions [3][25][35] Financial Performance - The company achieved record revenue of $277 million for the fiscal second quarter of 2026, reflecting a 22% increase compared to the previous year, primarily due to inorganic growth from acquisitions [5][6] - Adjusted EBITDA for the fiscal second quarter increased by $12 million to a record $73 million, representing a 20% growth year-over-year [7][10] - Adjusted earnings per diluted share rose to $2.96, a 15.2% increase from the same quarter last year [5][10] Acquisition Strategy - The company has successfully executed two synergistic acquisitions in the past twelve months, contributing significantly to revenue growth [3][11] - The pending acquisition of Mars Parts is anticipated to further enhance the company's product offerings and customer value proposition in the HVACR market [26][34] - The company plans to fund the Mars Parts acquisition through a combination of a syndicated term loan and borrowings from its revolving credit facility [26][35] Market Conditions - The company experienced a 5.6% reduction in consolidated organic revenue, primarily due to market disruptions in the residential HVACR sector [5][11] - The organic revenue decline was attributed to a shift in consumer behavior towards repair rather than replacement of HVAC units, influenced by higher costs and new refrigerant standards [11][12] - The company noted destocking trends among customers, which impacted order volumes but did not result in a loss of market share [54][55] Future Outlook - The company expects to maintain mid to high single-digit organic growth rates through its Contractor Solutions segment, despite current market volatility [14][46] - The integration of recent acquisitions is projected to yield significant synergies, with expectations of reaching a 30% EBITDA margin for Mars Parts within a year post-acquisition [43][64] - The company remains committed to a strong balance sheet and capital allocation strategy, including share repurchases and continued investment in growth initiatives [25][73]

Financial Data and Key Metrics Changes - The company reported total revenue growth of 12% year-over-year and organic growth of 7.2% [5][11] - Adjusted EBITDA margin improved by 120 basis points to 25.2% [11] - GAAP earnings increased over 21% to $0.34 per share, while adjusted earnings were $0.35 per share [11][15] - Operating cash flow improved by over 30%, with free cash flow up 31% compared to the same period last year [11][16] - The effective tax rate decreased to 24.8% from 26.1% a year ago [15] Business Line Data and Key Metrics Changes - Residential revenues increased by 11.2%, commercial pest control rose by 11.8%, and termite and ancillary services increased by 15.2% [12] - Organic growth rates were 5.2% in residential, 8.3% in commercial, and 10.8% in termite and ancillary services [12] Market Data and Key Metrics Changes - The company experienced double-digit growth across all service offerings in the third quarter [11][12] - The integration of Saela has exceeded expectations, contributing to overall growth and performance [5][18] Company Strategy and Development Direction - The company is focused on both organic growth and strategic M&A opportunities, with a strong emphasis on operational efficiency and continuous improvement [5][6] - Investments in the commercial division have led to double-digit recurring growth, indicating a successful strategy in that area [7][36] - The company aims to maintain a balanced approach to capital allocation, including reinvestment in the business and dividend growth [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the markets and growth opportunities, expecting organic growth in the range of 7%-8% for the year [19] - The company anticipates continued improvements in margins and cash flow conversion above 100% for 2025 [19] - Management highlighted the importance of talent development and leadership initiatives to sustain growth [8][9] Other Important Information - The company has raised its quarterly cash dividend by more than 80% since the beginning of 2022, reflecting strong cash flow performance [17] - The company closed seven acquisitions in the third quarter, indicating a robust M&A pipeline [87] Q&A Session Summary Question: Performance in residential and momentum into October - Management confirmed that the momentum from June and July was sustained through the quarter, with early indications for October remaining positive [25][26] Question: Details on Saela's performance - Saela is expected to generate mid-$70 million in revenue in its first year, outperforming initial expectations [28][30] Question: Investments in commercial and competitive dynamics - Significant investments in the commercial sector have led to strong growth, with a focus on improving productivity and sales effectiveness [36][39] Question: Pricing strategy and customer acceptance - The company is targeting CPI-plus pricing, with expectations that this strategy will continue to contribute to margins [45][46] Question: Competitive landscape and modernization efforts - The competitive landscape remains healthy, with the company focusing on leveraging its multiple brands to capture market share [64][66] Question: Cash flow drivers and sustainability - Cash flow growth is driven by improved receivables management and lower tax payments, with expectations for sustainable mid-teens growth [70][71] Question: Incremental margin sustainability - While the company has achieved above 30% incremental margins, management indicated that fluctuations are expected as investments continue [74] Question: Strength in termite and ancillary services - The performance in termite and ancillary services reflects a healthy residential consumer willing to invest in essential services [78] Question: M&A pipeline and competitive environment - The company remains active in M&A, with a strong pipeline and a focus on being an acquirer of choice in the pest control industry [87][89]

Financial Data and Key Metrics Changes - The company reported total revenue growth of 12% year-over-year, with organic growth of 7.2% [5][15] - Adjusted EBITDA margin improved by 120 basis points to 25.2%, driven by leverage across the P&L [15][18] - GAAP earnings increased over 21% to $0.34 per share, while adjusted earnings were $0.35 per share [15][20] - Operating cash flow improved by over 30%, and free cash flow was up 31% compared to the same period last year [15][20] Business Line Data and Key Metrics Changes - Residential revenues increased by 11.2%, commercial pest control rose by 11.8%, and termite and ancillary services increased by 15.2% [15][16] - Organic growth rates were 5.2% in residential, 8.3% in commercial, and 10.8% in termite and ancillary services [15][16] Market Data and Key Metrics Changes - The company experienced double-digit growth across all service offerings in the third quarter [15][16] - The effective tax rate decreased to 24.8% from 26.1% a year ago, benefiting from tax planning efforts [19] Company Strategy and Development Direction - The company is focused on continuous improvement initiatives to develop its workforce and enhance profitability [12][22] - Strategic investments in M&A and organic growth are expected to drive future growth, with a target of 7% to 8% organic growth and 3% to 4% from acquisitions [23][22] - The company is enhancing its talent development programs to create a robust pipeline of future leaders [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position for continued growth, both organically and through acquisitions [12][22] - The integration of Saela has exceeded expectations, contributing positively to revenue and margins [31][33] - The company anticipates maintaining a healthy backlog and strong demand as it enters Q4 [56] Other Important Information - The company announced an 11% increase in its quarterly cash dividend, marking an 80% increase since early 2022 [21][22] - The company has made acquisitions totaling nearly $300 million year-to-date and paid approximately $250 million in dividends [21] Q&A Session Summary Question: Performance in residential and momentum into October - Management noted that the momentum from June and July was sustained through the quarter, with early indications for October remaining positive [29] Question: Details on Saela's performance - Saela is expected to generate mid-$70 million in revenue in its first year, outperforming initial expectations [31] Question: Investments in commercial and competitive dynamics - Significant investments in the commercial division have resulted in strong growth, with double-digit recurring revenue growth reported [39][40] Question: Pricing strategy and customer acceptance - The company is targeting consumer price inflation plus, with expectations for continued margin contributions [48] Question: Competitive landscape in the pest control industry - The competitive landscape remains healthy, with the company focused on leveraging its multiple brands to capture market share [66][68] Question: Cash flow drivers and sustainability - Cash flow growth is attributed to better receivables management and is expected to remain sustainable [78][80] Question: Cost inflation and expectations for 2026 - The company is not seeing significant changes in inflation for materials and labor, with pricing strategies effectively managing costs [116]

Q3 2025 Performance - Net sales decreased by 6.9% to $3.9 billion compared to the prior year[8] - Gross profit decreased to $1.2 billion[8] - Net income decreased by 57% to $122 million, representing 3.1% of sales[8] - Adjusted EBITDA decreased by 30.8% to $434 million, with an adjusted EBITDA margin of 11%[8] - Adjusted diluted EPS decreased to $1.88[8] - The company generated $465 million in free cash flow during Q3[9] Strategic Initiatives and Capital Allocation - Approximately $20 million was invested in Q3 to open a new millwork location and expand facilities in 7 states[11] - Value-added product mix reached approximately 47% in Q3 and 48% year-to-date[11] - $11 million in productivity savings were delivered in Q3, totaling $33 million year-to-date, related to supply chain initiatives[11] - $100 million was deployed in Q3 toward return-enhancing opportunities[11] - $404 million shares were repurchased year-to-date, representing approximately 48% of total shares outstanding since August 2021[11] 2025 Outlook - Total net sales are projected to be $15.1 to $15.4 billion[49] - Gross profit margin is expected to be 30.1% to 30.5%[49] - Total adjusted EBITDA is guided to be $1.625 to $1.675 billion[49] - Free cash flow is projected to be $0.8 to $1 billion[49]