Financial Data and Key Metrics Changes - Consolidated sales for Q3 2025 were $582 million, up over 9% year-over-year, driven by strong organic contribution and pricing actions [6][10][11] - Fully diluted earnings per share were $0.37 for Q3 2025, down from $1.17 in Q3 2024, primarily due to the termination of the U.S. pension plan impacting EPS by approximately $0.93 [10][11] - Adjusted fully diluted earnings per share increased by 11% to $1.30 for Q3 2025 compared to $1.17 in Q3 2024 [10][11] - Gross profit was $208.7 million, up from $189.7 million year-over-year, with gross profit as a percentage of net sales at 35.9%, an increase of 20 basis points [10][11][12] Business Segment Data and Key Metrics Changes - Water systems sales increased by 11% year-over-year, driven by price, volume, and acquisitions, with significant growth in Europe, the U.S., and Canada [7][14] - Energy systems sales rose nearly 15% year-over-year, with strong growth in the U.S., Europe, and India, despite expected moderation in Q3 due to seasonal factors [8][15] - Distribution segment sales increased by 3.4%, marking the strongest pricing performance in over two years, with operating income up 34% year-over-year [9][15][86] Market Data and Key Metrics Changes - The U.S. and Canadian markets for water systems performed well despite softer housing starts, indicating resilience and market share capture [7][14] - Internationally, energy systems sales outside the U.S. and Canada increased by 26%, led by growth in India and Europe [15] - The groundwater market in the U.S. was relatively flat, with expectations for low single-digit growth next year [56] Company Strategy and Development Direction - The company is focused on growth acceleration, resilient margins, strategic investments, and top-tier talent as part of its value creation framework [18] - Innovation is central to the growth strategy, with new product launches aimed at enhancing efficiency and reliability in the pressure-boosting market [19][20] - A new factory in Izmir, Turkey, is set to start production in Q1 2026, aimed at expanding capabilities in Eastern Europe and the Middle East [21][92] Management's Comments on Operating Environment and Future Outlook - Management expects a subdued market in the U.S. and Canada for 2026, with volume growth anticipated despite challenging macro conditions [27][30] - The company is optimistic about growth opportunities outside the U.S., particularly in Latin America and emerging markets [28][53] - Management highlighted the importance of customer intimacy and the ability to adapt to market needs as key drivers for future success [66] Other Important Information - The company announced a quarterly cash dividend of $0.265, payable on November 20, 2025 [17] - The effective tax rate for Q3 was 27%, up from 24% in the prior year, influenced by increased foreign earnings [16] Q&A Session Summary Question: Outlook for end markets in 2026 - Management anticipates a flattish market in the U.S. and Canada but expects volume growth driven by innovation and strong channel partnerships [27][30] Question: Impact of tariffs and geographic mix on energy systems margins - The majority of margin impacts are attributed to tariffs, with geographic mix contributing to a lesser extent [45] Question: Backlog growth in energy systems - Backlog growth is favorable, with positive trends expected in both U.S. and international markets [52][53] Question: Performance of groundwater market - The groundwater market is expected to remain flat, with low single-digit growth anticipated due to high replacement rates [56] Question: Distribution business margin improvements - Margin improvements are driven by better cost management, strategic pricing, and operational efficiencies [84][88] Question: Factory expansion in Turkey - The new factory is expected to start production in Q1 2026, with normalized margins anticipated in the latter half of the year [91][92]