Financial Data and Key Metrics Changes - In Q3, the company achieved sales of $1.022 billion, a 3% increase year-over-year, with adjusted operating income rising 10% to $263 million and adjusted EPS increasing 14% to $1.24 [6][13] - Return on sales (ROS) expanded by 160 basis points to 25.7% [6][13] - The company generated record free cash flow of $719 million year-to-date, up 14% year-over-year, and reduced its net debt leverage ratio to 1.3x from 1.4x a year ago [16] Business Line Data and Key Metrics Changes - Flow segment sales increased 6% year-over-year to $394 million, with residential sales up 3%, commercial sales up 5%, and industrial sales up 10% [13][14] - Water Solutions sales declined 6% to $273 million, with commercial sales down 6% and residential sales also down 6% year-over-year [14] - Pool sales increased 7% to $354 million, driven by price, volume, and the Gulfstream acquisition, although segment income rose only 3% [15] Market Data and Key Metrics Changes - The company expects Flow sales to grow in low single digits, Water Solutions to decline in mid-single digits, and Pool sales to increase approximately 7% for the full year [17] - The company anticipates fourth-quarter sales to be up approximately 3% to 4% [17] Company Strategy and Development Direction - The company is focused on transformation initiatives and has delivered approximately $56 million in transformation savings year-to-date, aiming for $80 million in 2025 [8][9] - The company continues to invest in growth initiatives and innovation through digital and product technology [8] - The company plans to share more insights on its 80/20 actions at an upcoming Investor Day in March [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive efficiencies and profitability, with a balanced capital deployment strategy [10][19] - The company is cautious about potential headwinds such as tariffs and high interest rates but remains optimistic about growth opportunities [64] Other Important Information - The company announced the acquisition of Hydra-Stop for approximately $292 million, enhancing its Flow business [6][16] - The CFO will be leaving the company effective March 1, 2026, with a smooth transition planned [10][11] Q&A Session Summary Question: Discussion on Pool margin productivity - Management acknowledged the challenging comparison for Pool's margin but expressed optimism for a rebound in Q4, highlighting investments made to drive future growth [23][24] Question: Update on Water Solutions growth - Management noted a slight decrease in core Water Solutions growth due to lagging commercial growth and international sales softness, particularly in China [33][34] Question: Transformation savings context - Management provided insights into the sources of transformation savings, emphasizing balanced contributions across all four pillars of transformation [43][44] Question: Hydro-Stop acquisition growth potential - Management indicated that Hydro-Stop is expected to contribute approximately $50 million in revenue for 2026, with cross-selling opportunities anticipated [87] Question: Digital sales percentage and future outlook - Management discussed the importance of digital strategies and the need for investment in digital front ends to enhance customer experiences [99][101]

Financial Data and Key Metrics Changes - In Q3, the company achieved sales of $1.022 billion, a 3% increase year-over-year, with adjusted operating income rising 10% to $263 million and adjusted EPS increasing 14% to $1.24 [6][13] - Return on sales (ROS) expanded by 160 basis points to 25.7% [6][13] - The company generated record free cash flow of $719 million year-to-date, up 14% year-over-year, and reduced its net debt leverage ratio to 1.3 times from 1.4 times a year ago [16] Business Line Data and Key Metrics Changes - **Flow Segment**: Sales increased 6% year-over-year to $394 million, with residential sales up 3%, commercial sales up 5%, and industrial sales up 10% [13][14] - **Water Solutions Segment**: Sales declined 6% to $273 million, with commercial sales down 6% and residential sales also down 6% year-over-year [14] - **Pool Segment**: Sales increased 7% to $354 million, driven by price, volume, and the Gulfstream acquisition [15] Market Data and Key Metrics Changes - The company expects Flow sales to grow in low single digits, Water Solutions to decline in mid-single digits, and Pool sales to increase approximately 7% for the full year [17] - The company anticipates fourth-quarter sales to be up approximately 3% to 4% [17] Company Strategy and Development Direction - The company is focused on transformation initiatives and has delivered approximately $56 million in transformation savings year-to-date, aiming for $80 million by the end of 2025 [8][9] - The company continues to invest in growth initiatives and innovation through digital and product technology [8] - The company plans to share more insights on its 80/20 actions at an upcoming Investor Day in March [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's execution and increased full-year guidance, expecting adjusted EPS of approximately $4.85 to $4.90, up 12% to 13% from 2024 [7][16] - Management noted that while there are uncertainties due to tariffs and interest rates, they are optimistic about the company's performance and growth opportunities [64] Other Important Information - The company announced that CFO Bob Fishman will be leaving effective March 1, 2026, and Nick Cash will take over [10][11] - The company has been proactive in mitigating the impact of tariffs through price increases and other strategies [18] Q&A Session Summary Question: Discussion on Pool margin productivity and full-year outlook - Management acknowledged the tough comparison for Pool margins but expressed optimism for a rebound in Q4, indicating that investments made in Q3 would drive future growth [23][24] Question: Update on Water Solutions growth - Management noted a slight decrease in core Water Solutions growth due to lagging commercial growth and international sales softness, particularly in China [33][34] Question: Transformation savings and future potential - Management confirmed confidence in achieving the 26% ROS target and indicated that transformation savings have been balanced across various operational areas [36][43] Question: Insights on Flow segment pricing and performance - Management highlighted strong performance across residential, commercial, and industrial sectors, with price increases contributing positively [50][51] Question: Hydrostat acquisition impact - Management confirmed expectations of $10 million in sales contribution from Hydrostat in Q4 and projected $50 million in 2026, emphasizing cross-selling opportunities [73][86]

Financial Data and Key Metrics Changes - In Q3 2025, the company achieved sales growth of 3%, with adjusted operating income increasing by 10% and adjusted EPS rising by 14% to $1.24 [5][13] - Return on sales (ROS) expanded by 160 basis points to 25.7% [5][13] - The company generated record free cash flow of $719 million year to date, up 14% year over year, and increased return on invested capital (ROIC) to 16.7% from 15.2% a year ago [16][17] Business Line Data and Key Metrics Changes - Flow sales increased by 6% year over year to $394 million, with residential sales up 3%, commercial sales up 5%, and industrial sales up 10% [13][14] - Water Solutions sales declined by 6% to $273 million, with commercial sales down 6% and residential sales also down 6% [14][15] - Pool sales increased by 7% to $354 million, driven by price, volume, and the Gulfstream acquisition [15][16] Market Data and Key Metrics Changes - The company expects Flow sales to be up low single digits, Water Solutions to be down mid-single digits, and Pool sales to be up approximately 7% for the full year [18] - The company anticipates fourth quarter sales to be up approximately 3% to 4% [19] Company Strategy and Development Direction - The company is focused on transformation initiatives and has delivered approximately $56 million in transformation savings year to date, aiming for $80 million in 2025 [8][9] - The company continues to invest in growth initiatives and innovation through digital and product technology [7][8] - The acquisition of Hydrostat for $292 million is expected to enhance the commercial Flow business [5][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the execution of their strategy and increased full-year guidance, expecting adjusted EPS of approximately $4.85 to $4.90, up 12% to 13% from 2024 [6][18] - Management noted that while there are uncertainties related to tariffs and interest rates, they are optimistic about the company's performance and growth potential [49][50] Other Important Information - The company has raised its dividend for 49 consecutive years and plans to continue share repurchases [8][10] - Bob Fishman, the CFO, will be leaving the company effective March 1, 2026, with a smooth transition planned [10][11] Q&A Session Summary Question: Concerns about Pool margin productivity - Management acknowledged the tough comparison for Pool margins but expressed optimism for a rebound in Q4, highlighting investments made to drive future growth [24][25] Question: Core Water Solutions growth outlook - Management noted a slight decrease in growth expectations for core Water Solutions, attributing it to slower market conditions, particularly in the food service industry [30][31] Question: Transformation savings and future potential - Management confirmed confidence in achieving the $80 million transformation savings target and indicated ongoing opportunities for further savings [36][37] Question: Flow segment pricing and performance - Management reported strong performance across residential, commercial, and industrial segments, with price increases being maintained [39][40] Question: Hydrostat acquisition and growth potential - Management indicated that Hydrostat is expected to contribute $10 million in Q4 and projected $50 million in revenue for 2026, with cross-selling opportunities identified [64][65]

Financial Data and Key Metrics Changes - In Q3, the company achieved sales of $1.022 billion, a 3% increase year-over-year, with adjusted operating income rising 10% to $263 million and adjusted EPS increasing 14% to $1.24 [16][5][6] - Return on sales (ROS) expanded by 160 basis points to 25.7% [6][16] - The company has increased its full-year guidance, now expecting sales growth of approximately 2% and adjusted EPS of approximately $4.85 to $4.90, reflecting a 12% to 13% increase from 2024 [7][23] Business Line Data and Key Metrics Changes - **Flow Segment**: Sales increased 6% year-over-year to $394 million, with residential sales up 3%, commercial sales up 5%, and industrial sales up 10% [18][16] - **Water Solutions Segment**: Sales declined 6% to $273 million, with core sales flat and commercial sales down 6% [19][16] - **Pool Segment**: Sales increased 7% to $354 million, driven by price and volume, with segment income up 3% [20][16] Market Data and Key Metrics Changes - The company reported a record free cash flow of $719 million year-to-date, up 14% year-over-year [21][22] - The net debt leverage ratio improved to 1.3 times, down from 1.4 times a year ago [22] Company Strategy and Development Direction - The company is focused on transformation initiatives that have led to robust margin expansion and operational efficiencies [7][12] - The "eightytwenty" actions are underway, aimed at driving top-line growth and enhancing customer relationships [8][12] - The company plans to share more insights on its strategic initiatives at an upcoming Investor Day in March [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and strategic direction, highlighting the successful execution of transformation initiatives [7][27] - The company remains cautious about potential headwinds such as tariffs and high interest rates but is optimistic about growth opportunities in 2026 [75][76] Other Important Information - The company announced the departure of CFO Bob Fishman, effective March 1, 2026, and expressed confidence in the transition to Nick [12][14] - The company has raised its dividend for 49 consecutive years and continues to repurchase shares [10][22] Q&A Session Summary Question: Concerns about pool margin productivity - Management acknowledged the tough comparison for pool margins but expressed optimism about future ROS expansion and investments made to drive top-line growth [33][34] Question: Update on Water Solutions growth - Management noted a slight decrease in growth expectations for Water Solutions, reflecting broader market conditions, but remains optimistic about North American performance [41][42] Question: Transformation savings and future potential - Management confirmed ongoing transformation savings and expressed confidence in achieving further improvements in operational efficiency [52][54] Question: HydroStop acquisition impact - Management indicated that HydroStop is expected to contribute approximately $10 million in Q4 and around $50 million in 2026, with significant cross-selling opportunities [88][100] Question: Digital strategy and future growth - Management emphasized the importance of digital transformation and the need for enhanced customer experiences through technology [114][115]