Financial Data and Key Metrics Changes - The company reported Q1 sales of $389 million, reflecting a 5% organic growth and a 4% reported growth, impacted by currency fluctuations [12][13] - Adjusted EBITDA for Q1 was $98 million, with an adjusted EBITDA margin of 25.2%, representing a 110 basis point year-over-year improvement [13][14] - Net debt leverage was below one at 0.9 times, including $77 million used for share repurchases during the quarter [14][15] Business Line Data and Key Metrics Changes - Non-residential end markets experienced mid-single-digit core sales growth, while residential and some commercial segments showed softness [12][13] - The company achieved strong margin expansion due to productivity initiatives and synergy actions from the previous year [13][14] Market Data and Key Metrics Changes - The company noted minimal impact from tariffs in Q1, with expectations of price-cost positivity based on implemented strategies [7][8] - By the end of 2026, only 2% to 3% of the company's cost of goods sold (COGS) will be sourced from China, indicating a significant reduction in supply chain exposure [9][34] Company Strategy and Development Direction - The company is focused on minimizing exposure to China and optimizing its supply chain to maintain competitive advantages [10][21] - Sustainability efforts have been recognized, with the company delivering 600 million gallons of filtered water in Q1, a 33% increase year-over-year [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment and maintaining guidance for core growth and margin expansion [52][66] - The company anticipates low to mid-single-digit core sales growth for Q2 2025 and adjusted EBITDA margins between 25.5% and 26% [42][43] Other Important Information - The company has seen a 60% increase in submitted continuous improvement projects from associates, aimed at enhancing operational efficiency [40][41] - The company is evaluating M&A opportunities while maintaining a strong balance sheet and cash flow generation [15] Q&A Session Summary Question: Impact of pricing and operating adjustments on guidance - Management indicated that while there are many moving parts, they are confident in maintaining their guidance for the year despite potential demand destruction due to price increases [52][66] Question: Changes in project timing or MRO order trends - Management noted no significant changes in project timing or MRO activity, with some acceleration in orders observed ahead of price increases [57] Question: Clarification on price-cost neutrality - Management clarified that price-cost neutrality refers to dollar levels, indicating confidence in managing costs effectively [64] Question: Confidence in affirming full-year guidance amid potential tariff increases - Management expressed confidence in their ability to manage costs and maintain guidance, emphasizing their strong supply chain positioning [78][82] Question: Competitive positioning relative to peers - Management believes they are well-positioned from a cost perspective compared to competitors, with limited available capacity in the industry [111][115] Question: Share buyback strategy - The company plans to continue monitoring stock prices and make informed decisions regarding share buybacks, supported by strong cash flow [117]

Financial Data and Key Metrics Changes - The company reported Q1 sales of $389 million, representing 5% core growth and 4% reported growth, impacted by 1% from currency fluctuations [9][10] - Adjusted EBITDA for Q1 was $98 million, with an adjusted EBITDA margin of 25.2%, reflecting a 110 basis point year-over-year improvement [10][11] - Net debt leverage ended the quarter at 0.9 times, including $77 million used for share repurchases [11] Business Line Data and Key Metrics Changes - Mid single-digit core sales growth was observed in nonresidential end markets, while residential and some commercial segments showed softness [10] - The company achieved solid execution on growth initiatives, driving sales performance to the higher end of the outlook provided previously [10] Market Data and Key Metrics Changes - The company experienced a 33% increase in the volume of filtered water delivered in Q1, totaling 600 million gallons, driven by growth in the installed base of filtered units [12] Company Strategy and Development Direction - The company is focused on minimizing exposure to China, with plans to reduce COGS from China to 2-3% by the end of 2026 [6][20] - A multiyear strategy has been implemented to restructure the supply chain, aiming for a competitively advantaged cost structure [8][14] - The company is also committed to sustainability, having received recognition for its efforts in this area [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in being price cost positive despite potential new tariffs from non-China sources [6][8] - The company anticipates that the operating environment will involve some level of new tariffs or added costs for the foreseeable future [22][23] - Management reaffirmed full-year guidance, projecting core sales growth in the low to mid-single digits for Q2 [26] Other Important Information - The company has seen a 60% increase in submitted continuous improvement (CI) projects year-over-year, aimed at enhancing operational efficiency [25] - The company is actively evaluating M&A opportunities while maintaining a strong balance sheet and cash flow generation [11] Q&A Session Summary Question: Changes in guidance and volume/price contributions - Management indicated that while there have been many moving parts, they are confident in managing to at least the guidance provided in February [30][31] Question: Impact of pricing on demand - Management acknowledged potential demand destruction but emphasized that they are not constructing guidance based solely on this assumption [46][47] Question: Education vertical spending trends - Management reported no observed slowing or increased hesitancy in the education vertical [55] Question: Confidence in affirming full-year guidance amid tariff risks - Management expressed confidence in their ability to manage effectively despite potential tariff increases [58][59] Question: Competitive positioning and cost structure - Management believes they are well-positioned from a cost perspective relative to peers, with limited available capacity in the industry [108][112] Question: Share buyback strategy - Management confirmed the ability to continue share repurchases based on current cash flow and leverage position [113][114]