Financial Data and Key Metrics Changes - Sales reached $8.2 billion, a 5% increase year-over-year, driven by organic growth of 4% and acquisition growth of 1% [4][10] - Gross margin improved to 30.7%, up 60 basis points from the previous year [4][11] - Operating profit grew by 14% to $808 million, with an operating margin of 9.9%, reflecting an 80 basis points expansion [4][11] - Diluted earnings per share increased nearly 16% to $2.84 [5][11] - The company maintained a strong balance sheet with a net debt to EBITDA ratio of 1.1 times [6][11] Performance by Business Lines - U.S. net sales grew by 5.3%, with organic growth of 4.4% and a 0.9% contribution from acquisitions [11] - Waterworks revenues increased by 14%, driven by large capital projects and public works [7] - Ferguson Home experienced a 1% growth despite challenges in the new construction market [8] - Residential trade plumbing declined by 4%, while HVAC revenues fell by 6% due to market pressures [8] - Commercial mechanical customer group grew by 21%, supported by large capital projects [8] Market Data and Key Metrics Changes - Residential end markets faced challenges, with revenue down 1% in the quarter [7] - Non-residential end markets performed better, with revenue up 12% [7] - In Canada, net sales increased by 2.2%, with organic growth of 0.7% and a 4.6% contribution from acquisitions [12] Company Strategy and Development Direction - The company aims to leverage multi-year tailwinds in both residential and non-residential markets [6][18] - Continued focus on acquisitions to consolidate fragmented markets, with the recent acquisition of Moore Supply Company enhancing HVAC presence [14][18] - Emphasis on delivering end-to-end solutions and maximizing contractor productivity through a multi-customer group approach [9][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in medium-term market performance despite current challenges [6][18] - The company expects approximately 5% revenue growth for the year and an operating margin range of 9.4% to 9.6% [15][16] - Anticipated modest price increases in line with traditional market behavior as the company enters 2026 [36] Other Important Information - The company returned $372 million to shareholders through share repurchases and dividends [5][14] - Investments in organic growth through capital expenditures totaled $118 million for the quarter [13][14] Q&A Session Summary Question: Data center and large capital projects growth - Management estimates large capital projects account for mid- to high-single-digits percentage of total revenue, with data centers making up over 50% of that [20][22] Question: Outlook for November and early 2026 - Current growth for October and November is about 3%, with expectations for continued pressure in new residential and HVAC markets [25][27] Question: Pricing trends and commodity outlook - Inflation was approximately 3%, with expectations for modest price increases entering 2026 [36][37] Question: Impact of pricing on margins - Operating margins are expected to progress modestly, with guidance to be provided in February [42][44] Question: Revenue from major projects - Revenue from large capital projects typically represents 2% to 4% of the construction value [68][69]