Financial Data and Key Metrics Changes - For the third quarter, net sales decreased by 3%, with a 2% decrease in local currency excluding the Kichler divestiture [8][14] - Operating profit was $312 million, with an operating profit margin of 16.3% [8][15] - Earnings per share for the quarter was $0.97 [8][15] - Adjusted earnings per share for 2025 is now anticipated to be in the range of $3.90-$3.95, down from a previous expectation of $3.90-$4.10 [11][23] Business Line Data and Key Metrics Changes - Plumbing sales increased by 1% in local currency, with North American plumbing sales also up by 1% driven by favorable pricing [8][9] - Decorative Architectural segment sales decreased by 12%, or 6% excluding the Kichler divestiture, with operating profit for the segment at $128 million and an operating margin of 19.1% [9][10] - Total paint sales decreased in low single digits, with DIY paint sales down mid-single digits due to soft demand [10][17] Market Data and Key Metrics Changes - International plumbing sales were in line with the prior year in local currency, with growth in many European markets but challenges in China [9][16] - The overall market environment remains volatile, with expectations for the U.S. and international repair and remodel markets to decrease low single digits in 2025 [20][21] Company Strategy and Development Direction - The company aims to unlock opportunities through strong execution, strategic investments, and innovation in product offerings [7][12] - Focus on maintaining agility in response to macroeconomic uncertainties and rising costs while continuing to drive long-term shareholder value [11][13] - The company is committed to capital deployment strategies, returning $188 million to shareholders through dividends and share repurchases in the quarter [11][19] Management's Comments on Operating Environment and Future Outlook - Management noted that while near-term market conditions are challenging, structural factors for repair and remodel activity remain strong [12][13] - The company is focused on mitigating tariff impacts and expects to continue to gain market share in key growth areas [12][21] - Management expressed confidence in the strength of their brands and innovative products to deliver long-term value [14][13] Other Important Information - The company generated strong free cash flow and maintained a solid balance sheet, with gross debt to EBITDA at 2x at quarter end [18] - The total annualized cost impact of tariffs is estimated to be approximately $270 million, with ongoing efforts to mitigate these costs [20][21] Q&A Session Summary Question: Impact of competitor price increases on paint pricing outlook - Management indicated that they do not expect significant pricing increases on paint as they maintain a price-cost neutrality relationship with The Home Depot [25][27] Question: Long-term impact of tariffs on plumbing margins - Management acknowledged the volatility of tariffs and emphasized ongoing mitigation efforts to offset costs and restore margins over time [28][30] Question: Surprises in plumbing margins for Q3 - Management noted that Q3 results were impacted by tariffs, industry softness, and elevated commodity costs, with some unexpected adjustments in inventory reserves [34][35] Question: Dynamics in builders' hardware business - Management explained that the builders' hardware business faced softness in sales due to industry-wide challenges and a planned shipping process change [37] Question: Clarification on inventory reserves - Management confirmed that inventory-related adjustments were larger than typical due to market conditions, impacting plumbing segment margins [101][102]