Financial Data and Key Metrics Changes - The company reported consolidated sales of $587.4 million for Q2 2025, an 8% increase year over year, driven by higher volume and pricing across all segments [17][11] - Fully diluted earnings per share were $1.31, up from $1.26 in the prior year, reflecting a 6 cent increase [17] - Consolidated operating income reached $88.1 million, an 11% increase from $79.1 million in the previous year, with operating income margin improving to 15% from 14.6% [19][11] - Gross profit was $211.8 million, up from $199.8 million, but gross margin decreased by 70 basis points to 36.1% [18][11] Business Line Data and Key Metrics Changes - Water Systems segment sales increased by 8% year over year, benefiting from favorable pricing and volume, although operating income decreased slightly to $61.8 million due to margin pressures [12][21] - Energy Systems sales grew by 6%, with operating income rising to $29.1 million and operating income margin improving to 37.5% [22][23] - Distribution segment sales increased by 5% to $200 million, with operating income rising significantly to $16.1 million, reflecting a 300 basis point margin improvement [21][14] Market Data and Key Metrics Changes - Sales in the U.S. and Canada for Water Systems increased by 5%, while international sales rose by 12%, with foreign currency translation negatively impacting sales by 1% [19][20] - The company noted a healthy backlog across all segments, with book-to-bill ratios above one, indicating strong order trends [51][86] Company Strategy and Development Direction - The company is focused on innovation, global portfolio expansion, and strengthening its leadership position in key markets, with a commitment to operational efficiency and capital deployment [27][28] - Recent acquisitions are performing well, and the company aims to leverage synergies to drive growth and improve standardization across its operations [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum despite global market uncertainties, citing a healthy backlog and encouraging order trends [6][8] - The company plans to maintain its full-year sales expectations and GAAP EPS guidance, while also preparing for potential non-cash impacts from pension terminations [26][96] Other Important Information - The company announced a quarterly cash dividend of 26.5 cents, payable on August 21 to shareholders of record on August 7 [25] - The company repurchased approximately 1.4 million shares for about $120 million during the quarter, indicating a commitment to returning capital to shareholders [24][28] Q&A Session Summary Question: Did Q2 benefit from pull forward orders? - Management indicated there was no significant pull forward from Q3 to Q2, maintaining a traditional order pattern [36] Question: How much did cost actions contribute to margin expansion in the distribution segment? - Cost actions contributed about a third of the 300 basis point margin expansion, with operational efficiency also playing a significant role [37][39] Question: Update on integration at PumpEngine and Barnes? - Integration is progressing well, with strong growth synergies being realized faster than expected [40][41] Question: Insights on the water segment's product mix? - Most mix pressure is product-driven, with a strong order book and backlog expected to support performance in the second half [50][51] Question: What catalysts are expected for the residential market? - Management noted that the residential business is primarily replacement-driven, and new product innovations are expected to help offset weaker housing starts [54][56] Question: Update on M&A pipeline? - The company has an active M&A pipeline and is focused on acquiring products that can drive growth in faster-growing markets [70][72]

Financial Data and Key Metrics Changes - Consolidated sales for Q1 2025 were $455.2 million, a year-over-year decrease of 1% [14] - Fully diluted earnings per share were $0.67 for Q1 2025, down from $0.70 in Q1 2024 [14] - Gross profit was $163.9 million, slightly up from $163.6 million in the prior year, with a gross margin of 36%, an improvement of 50 basis points [15] - Operating income was $44.1 million, down 8% from $47.9 million in the prior year, with an operating margin of 9.7% [15][16] Business Line Data and Key Metrics Changes - Water Systems segment sales in the U.S. and Canada were up 2%, with groundwater pumping equipment sales increasing by 6% and water treatment products by 7% [17] - Distribution segment sales decreased by 3% to $141.9 million, primarily due to lower volumes and commodity price declines [19] - Energy Systems segment sales increased by 8% to $66.8 million, with operating income rising to $21.9 million and an operating margin of 32.8% [20][21] Market Data and Key Metrics Changes - Water Systems sales outside the U.S. and Canada decreased by 2%, impacted by a 5% decline due to foreign currency translation [18] - The Energy Systems segment recorded growth across key product lines, supported by robust demand in the U.S. energy sector [11] Company Strategy and Development Direction - The company is focused on faster-growing markets, operational efficiency, and integrating recent acquisitions to enhance customer service [6][7] - Strategic acquisitions in Q1 2025 included PumpEng and Barnsley, aimed at expanding product offerings and market reach [28] - The company is committed to innovation and new product development, with a focus on high-growth verticals [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying business fundamentals despite challenges from tariffs and one-time costs [7][10] - The company is adjusting the lower end of its EPS guidance by $0.10, while maintaining full-year sales expectations [24] - Management noted that the business is largely in region for region, which historically tends to be resilient even during economic softness [29] Other Important Information - The effective tax rate for the quarter was 25%, up from 22% in the prior year, impacting EPS by approximately $0.03 [22] - The company ended Q1 2025 with a cash balance of $84 million and used $19.5 million in net cash flows from operating activities [23] Q&A Session Summary Question: Insights on the energy segment margins - Management indicated that while margins are strong, they do not expect the same growth as in previous quarters but anticipate maintaining strong margins due to smarter solutions and effective cost management [34] Question: Order trends in the water segment - Management believes the order growth is organic and not significantly influenced by tariff pull-forward, with selective inventory positioning to mitigate potential tariff impacts [35][36] Question: M&A priorities in the distribution segment - Management remains open to M&A opportunities in the distribution space but is currently focused on operational efficiencies and serving the market [39][40] Question: Tariff exposure and groundwater business performance - Management stated that the overall percentage of COGS from China is under 10%, and groundwater sales in North America showed strong growth, with residential sales up 11% and agricultural sales up 3% [48][51] Question: Organic book to bill ratio in water - The organic book to bill ratio was above one for the quarter, with backlog up mid to high single digits [57]