Financial Data and Key Metrics Changes - Total sales grew 6.4% year over year to $1.37 billion, with core sales growth of 4.8% driven by broad-based volume gains across both segments [21][22] - Adjusted earnings per share increased 9.4% year over year to $0.93, exceeding guidance due to better-than-expected sales volumes [14][23] - Free cash flow generation was strong at $323 million, an increase of $83 million year over year, reflecting effective cash management [30][31] Business Line Data and Key Metrics Changes - Water Quality segment sales reached $825 million, up 6.2% year over year, with core sales growth of 5% driven by strong demand for water analytics and treatment solutions [24][26] - PQI segment sales grew 6.8% year over year to $546 million, with core sales growth of 4.6% supported by recurring revenue and equipment shipments [27][29] Market Data and Key Metrics Changes - Core sales growth in Western Europe was 6.3%, led by double-digit growth in water quality, while North America saw core sales growth of 5.6% [14][16] - High growth markets experienced over 6% core sales growth year over year, with notable performance in Latin America and India [20] Company Strategy and Development Direction - The company raised its full-year adjusted earnings per share guidance to a range of $3.72 to $3.80, reflecting stable demand and positive macroeconomic conditions [10][32] - The capital allocation strategy remains focused on acquisitions, with a commitment to invest in emerging technology-oriented businesses [11][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic macroeconomic environment, citing strong secular growth drivers in water quality and essential goods [36][37] - The company anticipates continued strong performance in the second half of the year, supported by robust demand and effective execution of its business model [36][58] Other Important Information - The company announced a €20 million commitment to invest in Emerald Technology Ventures Global Water Fund II, enhancing its innovation and technology development efforts [11] - Adjusted operating profit margin for the quarter was 23.7%, with expectations for margin expansion in the second half of the year [22][33] Q&A Session Summary Question: Can you provide more details on core water quality growth by region? - Management indicated that their water quality business is resilient to fluctuations in government funding, driven by secular trends such as water reuse and sustainability goals [44][45] Question: What is the impact of tariffs and pricing on PQI margins? - Management explained that margin compression was due to acquisitions, timing of pricing actions, and investments, with expectations for gradual improvement in the second half of the year [48][51] Question: How is the company positioned in the UK water utility market? - Management expressed confidence in capitalizing on opportunities in the UK, leveraging direct sales to customers to identify and act on local opportunities [105][106]

Financial Data and Key Metrics Changes - Total sales grew 6.4% year over year to $1.37 billion, with currency providing a 150 basis point tailwind [20] - Adjusted earnings per share increased 9.4% year over year to $0.93, exceeding guidance due to higher sales volumes [22] - Free cash flow generation was $323 million, an increase of $83 million year over year [22] Business Line Data and Key Metrics Changes - Water Quality segment sales reached $825 million, up 6.2% year over year, with core sales growth of 5% [22][23] - PQI segment sales grew 6.8% year over year to $546 million, with core sales growth of 4.6% [24][25] - Water Quality's adjusted operating profit increased 11.5% to $214 million, with a margin of 25.9% [24] - PQI's adjusted operating profit was $140 million, flat year over year, with a margin of 25.6% [28] Market Data and Key Metrics Changes - Core sales growth in Western Europe was 6.3%, led by double-digit growth in water quality [13] - North America saw core sales growth of 5.6%, with both segments generating growth above 5% [13] - High growth markets experienced over 6% sales growth year over year, with high single-digit growth in PQI [13] Company Strategy and Development Direction - The company raised its full-year adjusted EPS guidance to a range of $3.72 to $3.80 per share, reflecting stable demand and macroeconomic conditions [9][31] - The capital allocation strategy remains focused on acquisitions to fuel long-term shareholder value [10][30] - The company is investing in emerging technology-oriented businesses, such as a €20 million commitment to Emerald Technology Ventures Global Water Fund II [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic macroeconomic environment, citing strong demand for technology solutions [34] - The company anticipates continued growth driven by secular trends in water reuse and sustainability [42] - Management noted that the infrastructure supporting technology and AI growth will strain water capacity, positioning the company well to meet these needs [15] Other Important Information - The company achieved mid-single-digit core sales growth for four consecutive quarters, demonstrating the durability of its business model [7] - Adjusted operating profit margin was 23.7%, consistent with underlying guidance assumptions [12][21] Q&A Session Summary Question: Can you provide more details on core water quality growth by region? - Management indicated that their water quality business is resilient to government funding fluctuations, driven by secular trends in water reuse and sustainability [41] Question: What is the impact of tariffs and pricing on PQI margins? - Management explained that margin compression was due to acquisitions, timing differences in pricing actions, and investments, with expectations for gradual improvement in the second half of the year [46][49] Question: How is the company positioned in the current M&A market? - Management stated that the M&A pipeline is active, with a focus on identifying attractive markets and companies, while maintaining a disciplined approach to capital allocation [62] Question: What is the outlook for the UK water utility market? - Management expressed confidence in capitalizing on increased spending opportunities in the UK, leveraging their direct sales approach [102] Question: How is the company addressing the challenges in the Chinese market? - Management noted that while water quality sales in China have been flat, they are executing well within available opportunities [94]

Financial Data and Key Metrics Changes - Total sales grew 6.9% year over year to over $1.3 billion, with core sales growth at 7.8% driven by broad-based volume gains across both segments [25][26] - Adjusted operating profit margin expanded 50 basis points year over year to 25%, an all-time high, with adjusted earnings per share growing 13% year over year to $0.95 [11][27] - Free cash flow increased by 39% year over year to $142 million, primarily driven by growth in earnings [32] Business Line Data and Key Metrics Changes - Water Quality segment sales increased 6% year over year to $794 million, with core sales growth of 7.4% driven by strong demand for water treatment solutions [28][29] - PQI segment sales grew 8.3% year over year to $538 million, with core sales growth also at 8.3%, led by volume growth of 6.7% and price increases contributing 1.6% [30][31] Market Data and Key Metrics Changes - Sales growth in Western Europe was robust at nearly 11%, with double-digit growth in both segments [13] - North America saw sales growth of approximately 8%, with high single-digit growth in both segments, particularly in water quality [16][17] Company Strategy and Development Direction - The company is actively deploying countermeasures to mitigate changes in the global trade and tariff landscape, including strategic pricing roadmaps and shifts in manufacturing footprint [9][19] - The recent acquisition of AquaFetus for $20 million is expected to enhance the company's UV treatment portfolio and expand its ability to serve European customers [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic macroeconomic environment, citing the essential nature of their products and the durability of their business model [8][38] - The company reaffirmed its full-year 2025 adjusted EPS guidance of $3.6 to $3.7 per share, with expectations of low to mid-single-digit core sales growth [34][36] Other Important Information - The company has a strong financial position with gross debt of $2.6 billion and cash on hand exceeding $1.2 billion, resulting in a net leverage of 1.1 times [33] - The company completed its second CEO Kaizen week, focusing on continuous improvement and operational excellence [22][23] Q&A Session Summary Question: Can you provide more color on the sequencing of tariff mitigation? - Management indicated confidence in mitigating tariffs, with gross exposure estimated at 3.5% of sales, and emphasized ongoing optimization efforts [44][45] Question: Have you seen any changes in customer confidence based on demand indicators? - Management reported strong demand remains for the PQI business, with no indications of softening in order patterns [47][48] Question: Can you discuss price elasticity in relation to consumables versus equipment? - Management noted a surgical approach to pricing, with 80% of sales tied to essential goods, indicating a sticky relationship with customers [55][57] Question: How do you view the impact of tariffs on competitive positioning? - Management expressed optimism about leveraging their asset-light manufacturing model to gain market share amid market dislocations [91][92] Question: What are the implications of the recent EPA announcement regarding PFAS? - Management remains excited about opportunities in PFAS analysis and treatment, with no immediate impact on forecasts [60]